Corn Price Range & Weather Outlook - Friday, 26 May 2017

Markets will be closed on Monday for the Memorial Day holiday and will be quickly influenced by the first USDA look at the nation’s corn crop-conditions report on Tuesday.  Important weather issues that the trade will be watching over the long weekend will be the rainfall totals in parts of Arkansas, Kansas, Illinois, Indiana, Nebraska, and Missouri and low temps in the northern Corn Belt.  Kevin Van Trump of the Van Trump Report shared insight from one of his dependable sources located in the eastern Corn Belt in his newsletter today. “As I passed on to you a few weeks ago, the area for replant in the eastern belt is huge.  Early estimates back then were that 15% would need re-planted, but many guys are talking higher than that now.  And some will simply go to beans where able due to herbicides….I can assure you the top is off in the east and the results won’t be known until the late-summer or fall reports with no confirmation until January.”

The trade has been discussing the possibility of the USDA lowering the yield or acreage estimates in their upcoming June report.  FC Stone doubts that this will happen based on the formula/system used by the USDA that says when 80% of the corn is planted by mid-May the crop is expected to yield at trend. Acreage changes generally don’t occur until after the June report except in very extreme situations.

Marketwise Ag Services has tracked the December corn futures price from January 1st to expiration in December for 38 years and has found that corn prices in 2017 are record setting.  Since January 1st of 2017 the total range of December corn has only been $.25 3/4, this is an extremely tight range. The high so far for this year also occurred in February which has only happened one time before in 1982. Over the past 38 years the average range has been $1.25/bu., the average range for the past 5 years has been $1.95/bu. and over the past 10 years has been $2.25/bu. The smallest range seen in those 38 years was in 2003 when the price span was only $.44/bu. and there has only 4 years with a range lower than $.60/bu.  All of this suggests that we may expect more volatility in prices as we move forward in the season. Food for Thought…So when does the high generally arrive? 58% of the time the high has arrived by the end of June and 74% of the time the high has arrived by the end of July.

The U.S. saw 21% of the soybean crop planted last week bringing the total to 53% planted. The current political situation in Brazil is driving their currency value lower which could spell trouble for U.S. soybean exports but so far exports have remained strong.  The trade had only expected 7.3 to 14.7 million bushels in exports due to cheaper soybeans out of Brazil but export sales hit 17.4 million bushels.

The White House has proposed possible cuts to the Ag budget of -$46.5 billion over the next 10 years.  The largest reduction of -$38 billion is proposed to come out of farm supports which would include setting new limits on federal subsidies for crop insurance premiums and caps on commodity payments.

There are several storm systems expected over the holiday weekend set to arrive in 2 to 3 waves of heavy rainfall. Some of the storms are predicted to become strong to severe across parts of the Midwest with Missouri expected to be the epicenter for severe weather including high winds, hail, heavy rainfall and tornadic activity is possible.  The widespread rainfall is expected to further delay planting/replanting across a large portion of the Corn Belt.  The first map below shows the outlook for where the severe weather is most likely to occur.  The second map is a 3 day precipitation map for today through Monday.  The outlook for the week following Memorial Day shows drier and warmer conditions.

PLANTING PROGRESS

 

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