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Is the rally over?

Grains have rallied sharply the last two weeks on cool/wet conditions and late planting of grains. However, in Monday's 6/3 planting progress report, 5% of the corn and 13% of the soybeans were planted last week -- equal to the average for that time period. That is in spite of very wet and cold weather last week that kept most planters at bay. So if we can plant that much on a poor week of planting, how much will be accomplished if a window of planting opportunity opens this week?

Weather today includes light rain across North Dakota, Minnesota, Iowa, Wisconsin, and Nebraska with the heaviest accumulations in northeast North Dakota -- where they least need the rain.  

Otherwise, it's mostly dry across the Midwest, with cool weather forecast the next week along with little additional precip. That should allow another window of planting opportunity to open up for many producers, including in Iowa, Minnesota, and Wisconsin where planting progress is most behind normal (only about 0.5 inch forecast the coming five days). The driest areas will be central Illinois and northeast Missouri, where only 0.10 of rain is forecast the coming five days and all of Iowa, Illinois, Indiana, and Ohio (where .25 to .5 inch of rain is forecast the coming five days). This window of opportunity could mean the completion of corn planting and most of soybean planting in this area -- just in time to salvage the acreage!

Planting progress reports showed corn at 91% complete (only 4% behind average), with Wisconsin (74% planted), Iowa (88% planted), Minnesota (87% planted), Missouri (87%), and North Dakota (84%) the only states with less than 90% done. Soybean planting progress is 57% complete, 17% less than normal of 74% complete. HRS wheat was only 80% complete, just 1% more than last week and well behind the 92% normally planted. North Dakota only advanced 2% in the wet week to 64% planted.  

Crop conditions included HRS wheat at 64% good/excellent, below last year's high 78% but about average to only slightly below average (which isn't bad on such a late-planted year). Winter wheat conditions improved 1% to 32% good/excellent, with the Pro Ag yield model declining a small 0.10 bushel per acre to 44.75 bushels per acre, well below trend of 47.27 bushels and USDA's recent estimate of 45.4 bushels. Corn conditions were rated 63% good/excellent, meaning the Pro Ag yield model was at 155.5 bushels per acre, just slightly below trend of 158 bushels per acre and USDA's projection of 158 bushels per acre. The corn ratings were higher than expected by the market, as the crop that is in good shape is roughly equal in acreage to the crop rated in below-average condition. Overall, these numbers suggest a relatively average crop year -- better than expected by the market. So prices are retreating today as we have about an average crop of grains coming in 2013 in spite of late planting.

With the cold/wet spring, we certainly have alleviated any lingering concerns about drought from the devastation of 2012. Now, most all states have adequate to surplus moisture, so if this crop does get planted, we now have the soil moisture to provide a good production year and potential return to normal yields. We likely will lose 1 to 1.5 million acres to prevent plant in North Dakota and northern Minnesota, some of which will come from HRS wheat and corn acreage. But overall, the outlook for this year still remains negative, with prices expected to still dip once planting gets completed.  

Specs and hedgers can now sell corn, soybeans, and CBOT wheat again, putting on hedges for 2013, 2014, 2015, or 2016 crops. Downside price targets remain $4.50 December corn, $10 November soybeans, and $6 Chicago July wheat.  

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