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Roy Smith: Still looking
I titled my column for last week “Looking for Clues” to the future direction of the grain markets. I think I could call this week’s title “Still Looking”. Markets do not seem to be any more certain today than they were seven days ago. Production potential is also as unsettled today as it was last week at this time. While some of the areas that were dry got some rain, other areas that had too much moisture also got more rain. It is getting late enough that production potential is dropping where the crops are not planted even some finally do get planted.
Here in Cass County corn planting was finished up in the normal time period. The corn that was planted the first week of April managed to escape the late cold weather and is looking very good today. Most of the corn was planted between April 29 and May 10. Historically that is a normal planting season for this area. Where once we thought that May 20 was the best day to plant corn, we now think planting should be finished by then.
I started planting soybeans on May 6. That is the earliest I have ever started. We once thought that soybeans were more of a warm weather crop. Now the agronomists tell us that the earlier we plant the better the yield potential. I am not sure I buy their theory, but with nearly ideal conditions, it seemed like a good idea to start.
The rain that fell on the afternoon of May 11 was great for the beans on my farm in the hills. However, the one river bottom farm that was planted on May 10 got 3.5 inches of very hard rain in a short time. When I scouted the field on Tuesday of this week the soil had the consistency of concrete. It appeared that poor emergence could be a problem. The rain today should be the answer to that situation-I hope. Since I bought my no-till planter in 1992 I have never had a poor stand of soybeans. I have my fingers crossed that the record will continue.
The soil was dry enough to plant the other river bottom field on Wednesday. I put on my old disk that has been used only three times since I began no-tilling. I got the field worked up to level out some of the damage from last year’s flood and to kill the walnut and cottonwood trees that had sprouted in the past year. My planted monitor when I finished planting indicated that I was unable to plant only 3.47 acres that were too wet. I feel pretty good about being that close to having every acre planted. The Missouri River is at flood stage today and forecast to stay that way barring any further huge rains upstream.
I feel for those farmers in the Mississippi River flood area and those in the Eastern Corn belt who are still unable to plant. My worst experience with crop disasters was surviving the four years of drought in 1974-1977. I know from experience how tough it is to have good crop prices but not be sure enough of production to have the nerve to forward price.
Crop prices held together this week very well considering that the long term seasonal averages show this to be a time of price depreciation in most years. No doubt the production problems that exist in much of the country are keeping prices from eroding as they usually do. Knowing how much to sell and when to pull the trigger is a guessing game. Looking at futures charts does not give many clues.
I continue to watch basis as one indicator of demand for cash grains. The cash corn bid at Midwest Coop in Eastern Nebraska set an all time record at $7.28 today. That reflects a basis that has improved 13 cents in May. The soybean bid is not quite as spectacular as that for corn. However, the soybean basis has gone up 23 cents during this month. When the basis starts to slip it will be a very good indicator that the rally is coming to an end. There is no sign of that yet.