Too Much Rain Expected to Continue and Ag Secretary Confirmed - Tuesday, 25 April 2017

The latest Commitment of Traders report showed that the Funds are holding larger short positions than the trade had thought.  The newest numbers show that they are short 189,000 corn contracts, 42,000 soybean contracts and 176,000 Chicago wheat contracts.  This combined total of short positions sets a new record.  The current cold and wet forecast which is predicted to slow planting progress is also viewed to be a potential “spark” which could ignite prices and a short-covering by the Funds.

The USDA indicated a significant amount of corn was planted last week in the Planting Progress report Monday afternoon.  The trade had been expecting an increase from the 6% of a week ago to somewhere around 10 to 14%.  Kevin Van Trump of the Van Trump Report see’s the reported 17% as a bit of a “stretch” due to the extensive wet and cold conditions found across a large portion of the Midwest. The graphic below shows the percentage of corn planted according to the data from the report in addition it shows the states that are below and above their 5 year average.  The USDA estimates that 4% of the corn crop is now emerged. Some states to take note of:

  • Illinois jumped from 6% to 34% complete.
  • Nebraska increased from 3% to 17%.
  • Indiana had 4% of their crop planted a week ago now 15% is complete.
  • Iowa saw an increase from 2% to 8% this past week.

Traders were also surprised by the USDA’s Planting Progress report for soybeans.  The report indicates that the country is actually ahead of the traditional pace of 3% and reports that 6% of the nation’s soybean crop is planted.

A U.S. Court of Appeals for the District of Columbia Circuit heard arguments Monday from attorney’s hired by the Renewable Fuels and Petroleum industries regarding the role that the EPA has in the implementation of the Renewable Fuels Standard. According to Politico, “The EPA will defend its use of a waiver to set the conventional biofuel requirements below the Congressional levels; and it will argue that it was under no obligation to make a change to the number of companies that must comply with the program.”

The Senate confirmed Sonny Perdue as the U.S. Ag Secretary last night.  His appointment was announced on January 19th the day prior to the inauguration of President Trump.  The President is set to sign a new executive order today that is designed to promote agriculture and rural prosperity and is holding a roundtable discussion with several U.S. farmers today at the White House.

The first major weather legislation since the 1990’s was recently signed by the Trump Administration.  The purpose of the 97 page bill called the, “Weather Research and Forecasting Innovation Act of 2017”, is to improve weather forecasting that ranges from 2 weeks to 2 years in the future. “The new move is trying to improve forecasting for everything from Category-5 hurricanes to the next El Niño.” This Act has bi-partisan support and is expected to be extremely valuable to farmers regarding what and when to plant and to help industries make advanced preparations prior to being impacted by weather events.

Continue to expect rain delays in the days ahead.  The active weather pattern we have been seeing the past few weeks is not expected to go away anytime soon.  Perhaps of equal or even greater significance is the approaching front that is expected to bring a hard freeze and widespread frost across the Midwest impacting planted and emerging crops.

The map below shows the incredible amounts of precipitation expected today through next Tuesday, May 2nd.  

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