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258135

Plains’ Snowstorm Rallies Wheat Market

It was a big day on Monday for grains, as the heavy snow in northwest Kansas over the weekend likely damaged boot stage or later wheat by mashing it down to the ground. Temperatures were not so cold, and snow generally provides insulation, but the heavy amounts this late probably broke stems and thus the large losses estimated by some. So, KC wheat is leading the market higher. The most bullish thing about the rough weekend weather (heavy rains as well) is that it reminds traders that bad things can happen to crops from the weather. (There haven’t been any bad weather events the past three years of above-trend yields).  

We talked in last week’s column about the forecast cold weather and the potential impact on winter wheat. But instead of it freezing the winter wheat, it probably broke the stems with the heavy snow on boot stage or later wheat. And this is just the start of the weather market for 2017 - there could be a lot more fireworks before the season is over.

Ironically, the crop progress/condition report yesterday afternoon, May 1, left winter wheat conditions unchanged at 54% G/E, recognizing virtually none of the damage to the winter wheat! Still that’s compared to 61% rated G/E last year at this time. Our Pro Ag yield model is at 49.8 bushels per acre, up 0.1 bushel per acre, which is a crazy result considering the weekend damage. Winter wheat is 42% headed, ahead 8% of the average 34% headed, with Kansas at 44% headed (11% ahead of normal), Oklahoma 76% headed (8% ahead of normal), and Texas at 78% headed (13% ahead of normal). So with wheat that well developed, heavy snow is not going to be good for it.

Corn is 34% planted, equal to normal as the eastern Corn Belt states (Ohio, Illinois, Indiana, and Missouri) are from 11% to 21% ahead of normal planting progress. The west is generally behind normal. The east got some heavy rains over the weekend so that could cause some replanting with the cold conditions. Corn emergence is 9%, 1% ahead of normal. Soybeans are 10% planted, 3% ahead of the normal 7% with much of the progress in the Delta and eastern Corn Belt. Cotton is 14% planted, 3% behind normal of 17%.  

Sorghum is 27% planted, 1% ahead of average 26%; sugar beets are 48% planted, 12% behind the average 60%.  Oats are 67% planted, 3% behind average 70% while emergence is 47%, 3% behind normal 50% as well. HRS wheat is 31% planted, 15% behind normal 46% planted. Emergence is only 9%, 8% behind the normal pace of 17%. Barley is 32% planted, 21% behind average 53% planted, so small grains in the northern Plains are well behind average pace of planting. Barley emergence is 14%, 7% behind the normal 21% emerged at this time.  

Topsoil moisture is 91% rated adequate/surplus, 4% higher than last week and last year so it is getting a bit wet. Subsoil moisture is rated 88% adequate/surplus, up 4% from last week and vs. 86% last year at this time.  

The next seven days will see mostly above-normal precipitation coming down in the eastern Corn Belt, including in Missouri, Illinois, Indiana, and Ohio, where planting is most advanced. Precipitation forecasts are for below-normal precipitation elsewhere, so that might allow the western Corn Belt to move ahead with planting once soils dry out. Temperatures are forecast to be above normal for the far western U.S. and western Corn Belt, but below normal for the central and eastern Corn Belt. The eight- to 14-day forecast is for above-normal precipitation in the west, and below-normal precipitation in the east. Temperatures are forecast to be below normal in the central and eastern Corn Belt, but above normal for the western U.S. and far western Corn Belt.    

Weekly export shipments were strong again yesterday at 43.1 mb corn, 19.2 mb soybeans, and 21.1 mb wheat, so that is helping to support the recent rally. But make no mistake, the adverse weather over the weekend is the spark that caused the rally, led by the KC wheat where huge losses likely occurred in the HRW wheat crop where heavy snow occurred this late in the season.      

We are getting to the point where Minneapolis wheat producers and corn producers might consider selling grain again, but winter wheat and soybeans still have a ways to go before we think sales should be considered. There could still be a lot more weather to trade before this crop is in the bin, though, so at least there is hope now that the market is more sensitive to the damage that adverse weather can bring.  

Ray Grabanski is president of Progressive Ag Marketing, Inc., the top ranked marketing firm in the country the past eight years. See http://www.progressiveag.com for rankings.

This material has been prepared by a sales or trading employee or agent of Progressive Ag Marketing, Inc. and is, or is in the nature of, a solicitation. This material is not a research report prepared by Progressive Ag Marketing's Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions. 

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