With only five percent of the corn crop planted so far this
year, compared with a trailing five-year average of 31 percent,
prices rose the most in 10 months Monday, according to
Tuesday, however, paints a different picture, as the market
erased yesterday's gain on speculation that supplies will be
ample despite the wet weather.
So it goes with corn. It's always about the weather and how
the weather will affect the plans of farmers. Those plans,
according to U.S. Department of Agriculture estimates, included
planting 97.282 million acres, the most in 77 years.
Of course, with too much rain, plans can change and if they
do, the number of acres planted goes down and the price of corn
goes up. On the other hand, if the weather improves and farmers
get back in the fields, planted acreage goes up and the price per
bushel goes down.
Credit Suisse Group AG analyst Tobias Merath in Zurich took
the "better weather/more corn" side of the argument, saying that
the reduced planting progress "is not enough to compensate for
the longer-term outlook of rising production and lackluster
demand." He added, "We expect lower prices for corn, both near-
As for the weather prognosticators, T-Storm Weather LLC called
for prime corn growing states like Illinois, Iowa and Indiana to
have the wettest April ever. So far, the rain dance crowd is spot
on. The National Weather Service reported that much of the upper
Midwest, from Missouri to Michigan, has already had more than
twice the normal rainfall over the past two weeks.
So, to recap: Too much rain equals later planting, less corn,
and higher prices, right? Not necessarily.
Emerson Nafziger, crop sciences professor at the University of
, "It's still pretty clear that yield losses don't take a large,
sudden drop just because the calendar turns from April to May
before we finish planting." In general, Nafziger said, yield
losses accelerate as planting is delayed. This translates to
about 15 percent lower yields if planting is completed by May 20
and about 25 percent loss by June 1.
In addition, planting date data are notoriously variable, with
some years showing little loss for late May planting and others
showing large losses. This only emphasizes the fact that actual
loss from late planting is tied to conditions during the rest of
the season more than to planting date.
The USDA predicted, in February, that U.S. corn production
might rise to a record 14.53 billion bushels this year.
Corn for delivery in May stood at $6.8375 a bushel on the CBOT
Tuesday at noon, down slightly. July corn was down 0.87 percent
at $6.5400 and the Teucrium Corn ETF (NYSE:
) was trading at $41.99, up 0.15.
As of this writing, Jim Probasco had no position in any
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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