Commentary: U.S.D.A. data pushes corn and soybeans higher, planting delay concerns grow

by Ron Sterk
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The April 9 World Agricultural Supply and Demand Estimates report from the U.S. Department of Agriculture lit a fire under corn and soy complex futures, sending corn to new record highs and stoking impressive gains in soy futures. But it might be wet weather that ultimately determines supply.

Corn prices shot up 13@16½c a bu, with the July 2008 contract hitting $6.28¼ during the session and July 2009 topping out at $6.37½. Soybeans surged 38@61½c with the three nearby contracts again passing $13 a bu. Soybean meal was up $11 to nearly $20 a ton and soybean oil up more than 2c a lb. By Thursday corn futures prices backed off some but soybeans continued their upward surge, gaining 27@43c a bu and soybean oil another 2c a lb. Wheat futures prices had an unusually quiet day following the report with contracts in Kansas City, Chicago and Minneapolis 9c a bu lower to 10c higher, but many changes were only 1@2c. Prices turned lower on April 10 and were down sharply for the week.

Much of the U.S.D.A. data was well off analysts’ pre-report expectations. Wheat ending stocks for 2007-08 were projected at 242 million bus, well below analysts’ average expectation of 262 million, and corn was at 1,283 million bus, also below expectations that averaged 1,303 million. Only soybean ending stocks were close at 160 million bus versus 157 million predicted.

While the new data added volatility to corn and soybean futures prices in Chicago, it’s the ongoing rain that has caught the attention of farmers in the country. The most likely scenario will be more soybean plantings, which already were indicated to be up 18% from a year ago prior to weather considerations.

Excessive rainfall across soft red winter wheat areas of the southern Corn Belt, as well as northern portions of several southern states, could result in increased abandonment of wheat, leaving farmers with few planting alternatives but soybeans.

And continued wet fields across the central and northern parts of the Corn Belt have heightened worries that farmers might run out of time to plant corn, already projected to be down 8% from a year ago. Again, farmers most likely would switch to soybeans.

All eyes will be on the "Corn: Percent Planted" section of the April 14 U.S.D.A. Crop Progress report next week. On the same date the past two years corn was 3% planted, and in 2005 it was at 6%.

With no new U.S.D.A. data available until the May 9 Crop Production (first winter wheat production forecast) and Supply and Demand reports, weather will have a great influence on the markets. While there still is time to plant corn, and for soft wheat to recover, the window is closing.

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