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Second Phase of Corn, Soybean Growing Season Starts
The corn and soybean planting and growing season can be broken into three phases.
The first phase is planting and early growth (through June 15); the second is growth and maturity (mid-June through August 15), and the third is maturity and harvest. These phases can blend into each other. Each phase consists of different variables that will grab the attention of the market.
During the first phase (May and early June), attention is focused on planting progress and crop emergence. This year, both were significantly behind normal, and that could lead to crop production deviation. Prices responded by moving upward, with corn futures gaining $1.00 in a month’s time.
The second phase, which is the growth and maturity stage, is arguably the most critical stage in any given year. This is when timely rains, heat (or lack of), and applications of fertilizer and fungicides occur. This sets the stage for either a big crop or, if weather is adverse, lower yields.
The key for high-yielding crops is a successful first stage, which continues into a favorable second stage. This year, we experienced a challenging first stage. Ideal weather for this year’s crops is needed in order to catch up. This year’s second phase will be the most critical since 2012, when drought was a major factor, reducing crop production by approximately 25%.
Due to very questionable conditions this spring, phase three will have more importance this year, perhaps more than any other year in history. With the majority of the crop behind schedule (a third of the corn crop was planted after June 1), late maturity and good fall weather are paramount. The need for an extended fall with proper dry-down conditions will be important to this year’s crops. In recent years, in particular the last two, late-planted crops were followed by excellent weather conditions, allowing crops to catch up to a normal growth pattern. Still, most farmers were concerned that it would take a nearly ideal late August through September window for proper maturity, and that is what occurred. Can this happen again this year? Perhaps so. What if it doesn’t?
The most critical weather is now, in front of the market the next six weeks. Conditions will either help ease the stress of a challenging phase one or exasperate the difficulties of a poor spring and set the stage for a major price rally. Make sales on price rallies and have these covered with call options. Maintain a balanced approach through the use of marketing tools, preparing for whatever the weather does for the rest of summer.
If you have comments or questions, or need help implementing put option strategies, contact Top Farmer at 800-TOP-FARMER, extension 129, and ask for Bryan Doherty.
Futures trading is not for everyone. The risk of loss in trading is substantial. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. Past performance is not necessarily indicative of future results.