Corn market trouble?-Ray Grabanski
Grain market bulls have recently been on the run, hoping to avoid being turned into steers in recent weeks as they have lost a lot of equity.
Most of that was due to the recent USDA acreage report, where it was found that a lot more acreage was switched to corn from the March 1 intentions, due to the high prices. If planting conditions had been good, we could have had another 1-2 million acres of corn, but as it was only 100,000 more acres than the intentions report in March appeared.
This is in contrast to recent media reports that indicated that corn acreage was likely not there. But, once again, market analysts were reminded not to bet against farmers, especially when the profits are offered to them at planting time. It certainly is amazing what farmers can accomplish given just a little incentive to plant. In 2011, farmers amazed market analysts by planting the eastern Corn/Soybean Belt crops mostly in June, given just a few days planting window. It's amazing what farmers got done in just a few short days!
That was of critical importance in the corn market, where the market was very concerned with the supplies of corn for 2011/12. Now, it appears we won't run out of corn, and with crop conditions back to an improvement this week, due to drying weather in already soggy areas, the corn market may indeed be in some trouble. If it weren't for the July contract being in delivery with tight stocks, the corn market could be running sharply lower right now.
Weather remains mostly cooperative, although the drought persists in the dry HRW wheat area and the soggy conditions continue to plague the northern Plains. However, the crop is starting to grow out of some problems in the past, as we hit the peak summer growth period for most crops.
With crop conditions improving in most crops this week, that reverses the problem from last week, when crops suffered from excess moisture. But at least excessive moisture conditions can improve quickly, unlike when a drought gets a grip in an area (such as is occurring in the HRW wheat belt right now).
Weather remains mostly cooperative in most areas, with the Corn Belt states of IA, NE, and ILL looking like real garden spots so far this summer. Even the soggy states of the eastern Corn Belt are looking better, although the crop remains behind normal development due to the late planting of corn in 2011.