Grains: US Farmers Hit A Home Run!
Just a few days ago I told you how the US corn planting season was way behind schedule. Wet spring weather was keeping farmers out of the fields during an essential spring planting window in early May.
As a result, the US corn crop was only 28% planted as of last Wednesday- a far cry from the average planting progress of 68%. This delay in planting had bulls sharpening their horns, ready to take corn prices higher.
What a difference a week makes…
Midwestern US farmers took full advantage of a recent drying trend and put the pedal to the metal. In fact, according to the USDA’s crop progress report released yesterday, farmers planted 42 million acres of corn last week.
Believe it or not, the record planting spurt puts the US corn planting season back on schedule. As of yesterday, 71% of the US corn crop is planted- slightly behind the 79% average for this time of year.
Not surprisingly, corn futures reacted poorly to the news…
The December contract, which is the benchmark for new crop corn, fell below $5.15 a bushel on the news. That’s the lowest price since June 2012.
So does this news diminish the chances of the price of corn running higher in June?
At this point- yes.
Last week’s feverish planting progress puts the US back on track to produce its largest corn crop since the 1930s. If Mother Nature cooperates this summer, corn prices should keep trending slowly lower into summer.
However, corn’s losses are soybeans gains…
Spot soybean prices are galloping higher thanks to tight old crop supplies. As you may know, the term “old crop” refers to soybean supplies left over from last year’s harvest. According to various sources, overseas buyers are scrambling to secure tight soy supplies to meet their immediate needs.
But much like corn, this year’s US soybean crop may be exceptionally large…
In fact, soybean output from US farmers is expected to rise 12% over last year. And that means bulls better enjoy their 15 minutes of fame in the bean market. In all likelihood, the essential grain will return to lower prices in coming months as large new crop supplies enter the market.
Bottom line…
It’s best to steer clear of the grain markets for now. Corn will likely trend lower in coming months as the market awaits a bumper US crop. And even though soybeans are currently running higher, it’s only a matter of time before this market weakens as well.
Until Next Time,
Justin Bennett
