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Farmers, markets struggle - Ray Grabanski
While farmers are struggling to get the crop planted in what is turning out to be one of the latest springs on record, the markets are also struggling to maintain their current high prices. This is a quandary that one cannot help but notice this spring.
It's hard to explain how this could be, but the clear indication of the problem is that weather is NOT dominating the market today like it did in past years. Instead, the large amount of speculator trading that has occurred in the past few years is continuing to have a large influence on prices. Since Goldman Sachs decided that the risk in holding commodities was no longer worth taking, the market has turned soft. Most surprising, while the market has turned soft on prices, the troubles the US has faced have never been greater.
Corn planting progress stood at an anemic 13% as we ended April this week, one of the slowest planting paces on record for all crops in the US. HRS wheat planting is faring no better, and in fact virtually all crops in the US are suffering from late planting in 2011. Not only is the planting progress anemic, but the winter wheat crop continues to struggle under the weight of a huge drought in HRW wheat country.
Western HRW wheat crops are failing, with the western TX panhandle in the worst shape, followed by the OK panhandle (which received some much needed rains last week, but is still in dire need of more). The winter wheat crop is struggling mightily.
Central KS is faring better, and eastern OK/KS actually have had some very decent precip recently, with generous showers compared to the massive drought suffered in the western parts of these states. KS is much better off than OK, and OK is much better off than TX. But overall, the crop is in pretty poor shape.
One can't help, though, notice the impact of the 'Goldman sag' in commodities, with silver seeing a sharply lower market this week after pushing to new highs last week. Silver has dropped about 20% the past 3 days, with some huge losses helping to hold back the rest of the commodities.
While the grains struggle, it is indeed an unusual sight to see the grains struggle with weak prices, while the planting progress is at the most anemic values we've had in history. The next few weeks will become critical, and while it does seem that planting may finally be getting close to occurring across the country, we really have our work cut out for us in agriculture over the next month. For we will need to virtually
plant the entire crop in essentially one month's time.
And to this point, the weather forecasts still aren't cooperating with us for the next 2 week forecast. Still we have mostly wet conditions accompanied by cooler than normal temps - not exactly a recipe for outstanding planting progress over the coming few weeks.
Already, it looks especially bleak for the Northern Plains, where corn and soybean acreage have expanded significantly in recent years. We basically haven't really gotten started planting yet in the Northern Plains, and final planting dates are now within 20 days for corn.
Obviously, at least some of the intended corn acreage won't get planted - the only question is how much. With a cool/wet forecast coming for the next 2 weeks, perhaps we are already getting hints at the answer - a significant amount of ground may not get planted! How the market may digest this new piece of information may be the story of the marketplace for the coming 2-3 weeks. For now, though, all eyes are on the skies, and it now is basically out of our control.
The information contained, while not guaranteed as to accuracy or
completeness, has been obtained from sources we believe to be reliable.
The opinions and recommendations contained are based on our judgment and do not guarantee that profits will be achieved or that losses will not be incurred. Recommendations should not be construed as an offer to buy or sell commodities. There is substantial risk of loss in trading futures and options on futures.