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Planters rule the market?

05/17/2013 @ 12:11pm

As the end of April approached, all the talk was about how slow the U.S. corn planting pace was developing. As the calendar turned to the month of May, the planting pace eventually hit the slowest rate on record.

Concern over Midwest drought turned to concern over conditions that were too wet and cold. All of this was happening while the market remained concerned about tight old-crop corn and soybean supplies.

Late planting and supply worries usually make up a bullish price recipe. Surprisingly, the market participants kept seeing the price action for corn remain benign. In fact, as of this week, for the month of May, corn is down 1.3%.

So, does it not matter that corn is planted late anymore? Are yields not affected when seeding occurs outside of the optimal planting dates? Has this measuring stick for crop performance been thrown out of the window? The answer: Maybe. Sort of.

The Market's View

Mike North, First Capitol Ag senior risk management adviser, says the U.S. farmers' newer seed and equipment technologies are changing the planting season and the way the market looks at it. "In the past few years, farmers have upgraded their eight-row planters to 16-row and some to 24-row planters. The market is catching onto the fact that farmers can put in the majority of the corn in a very short time frame," North says.

To be sure, this year's corn planting pace has gone from 5% complete on April 29 to 12% the following week, to 28% on May 13. And North sees next week's pace registering between 70% and 80% finished, as of this Sunday.

Longcreekfarms, a poster in Agriculture.com's Marketing Talk discussion group, agrees that bigger planters have changed mindsets. "Bigger planters = faster replanting, when the first round was sliced into mud. Here in the eastern Corn Belt, I finished corn on April 25. My crop received a frost on May 14, 2013, but it looks like everything is taking off again," Longcreekfarms wrote.

Can we surmise that it's the bigger planters that are making this market unresponsive to delayed planting? Ron and Sue Mortensen, Advantage Ag analysts, see the market looking for other news, other than planting information.

"Since there has been no reaction to record-slow plantings, the market will need something else to happen to cause the next big move. No news to cause a big move? Then prices could easily drift lower as the market sinks under the weight of much larger supplies," the Mortensens say.

But wait -- the planting story is not over, according to colorofmoney, another poster in Agriculture.com's Marketing Talk discussion group. "You have to get off the tractor and dig a little behind the planter to see what's really happening. It has been good here (southern Minnesota) this last week, but any corn planted before that was a little sticky underneath. Pictures don't always tell the whole story. Last night, 3/4-inch of rain fell and more to come Sunday. Planters will likely be parked here over the weekend and be rolling past Memorial Day around here," colorofmoney wrote.

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