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May sales look good at harvest
This is one of those weeks when I would like to concentrate on field work and forget the markets. I finally got a full day of planting in yesterday. Prior to that, planting amounted to bits and pieces between rains. It’s not that we have had a lot of rain. The problem is that it has come in such a way that there have not been many extended periods of several consecutive days suitable to get a lot done.
Regardless of my preoccupation with planting soybeans, the markets have been typically volatile since planting began around April 1. The latest cause for price movement was the government crop report, released Thursday morning. My experience over many years has been that when a lot of traders are lined up expecting prices to go one direction, they usually go the opposite direction. This time the market did something different. It went in expected directions!
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I use the term “expected directions” because the report was anticipated to be bullish for soybeans and bearish for corn. Surprisingly, the numbers in the report came out about as expected and prices moved about as anticipated. Those who were hoping for higher prices could look at the soybean situation. Those who feared lower prices could feel vindicated because corn prices moved sharply lower.
Farmers hoping for good news could take consolation in the fact that basis continues to be positive for old crop corn. It is fairly good for new crop corn and old crop soybeans. Basis for new crop soybeans is not as good as we would like, but better than it has been in prior years during the month of May. It is good enough that I forward contracted new crop beans last week instead of using the futures market as I usually do. The continued good basis indicates that the demand for grains remains strong, even though futures prices do not look so good.
Long term charts show that the month of May has traditionally been a good time to make sales of all three grains. The normal pattern is to see a high early in the month, then a pullback followed by another high sometime in June. Whether prices this year will follow that pattern closely or only slightly remains to be seen. Regardless, odds are good that sales made this month will look good by harvest.
The planting concerns I mentioned in my April 27 column proved to be unfounded. The first planting of corn is up and showing down the row. The later planting is close behind. The beans I planted on May 1 have emerged enough to see that I do not have to worry about depth or spacing. Two more days and planting will be over for another year. It appears that the weather is going to make this a pleasant, routine season this year.