Ag Roundup

May 04, 2009

Corn, soybeans & wheat all popped at the end of last week. Where's the beef? Or perhaps the bull?
  • Wet weather and corn plantings
  • Wheat won't sustain its rally
  • Uncertainty and soy

 

Rain, Rain, Go Away

Corn drives the ag bus. It's the largest crop in the U.S., worth approximately $47.4 billion in 2008. At this point in the season, farmers across the nation are desperately trying to plant some 85 million acres of corn. At least, that's what they'd like to be doing. Mostly though, farmers are scanning the skies and weather reports for signs that they might be able to close up their umbrellas. Plantings have been delayed because of wet weather in the South and East, with states such as Illinois reporting only 4% of its corn crop planted as of April 26. In the previous five years, Illinois had an average of 43% of its corn planting done by that date.

Of course, Illinois is only one state, and corn plantings in the top 18 corn states weren't that far behind the five-year average of 28%, at 22%. But analysts aren't expecting to see much improvement in today's Crop Progress Report, because the Southern and Eastern areas of the country are still behind and the Western region didn't get much done this week.

 

Corn (C,CBOT)

 

The market has been reacting accordingly, with corn making steady gains at the end of the week. Now those gains aren't just because of the wet fields. They also come from the fact that there is less producer selling (in other words, actual supply) right now. As Alan Brugler of Brugler Marketing and Management LLC stated on AgWeb.com:

 

"Producer selling dried up because a) they were busy planting and b) in areas where they couldn't plant they were hanging onto old crop supplies just in case they never get the new crop planted."

 

Whatever the direct reason, both May and July corn rose 10% on the week, with July closing at 413.750.

 

From Wet To Dry

On Friday, wheat took a >6% one-day jump on a little weather-related news, not domestically, but in Russia and Ukraine.

 

Wheat (W,CBOT)

 

 

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