Corn and soybeans were up wheat was down and cotton was mixed for the week. Weather continues to be a key factor in the markets. Rainfall in the 5-day forecast is sporadic throughout the Midwest with the majority of precipitation anticipated in the northern Corn Belt. Six to 10 day forecasts indicate precipitation on the eastern edge of the Corn Belt. NOAA projects above average temperatures and average precipitation in most of the Corn Belt and Mid-South for June, July, and August. These projections are extremely early so it is important to not read too much into them.
Cash corn prices remain strong as limited supplies have been supportive to the market. Weekly exports were slightly lower than expectations with net sales of 10.2 million bushels (8.7 million bushels for the 2012/13 marketing year and 1.5 million bushels for the 2013/14 year). Overall, the May 16th export report was neutral to friendly for old crop corn and neutral for new crop corn. Ethanol production increased 14,000 barrels per day to 857,000 barrels per day.
Corn planted as of May 13th was reported at 28% compared to 12% last week, 85% last year, and a 5-year average of 65%. Corn emerged was 5% compared to 3% last week, 43% last year, and 24% for the 5-year average. This is the lowest planting progress reported at this time of the year on record (the previous low was 29% in 1984). Planting delays from inclement weather in some key corn producing states may continue to be of concern. However, significant progress has been made demonstrating farmers perseverance and ability to plant a significant amount of acres in a short window. Market expectations for planting progress for this coming Monday May 20th are 55 to 65%, which may exceed the record for increased planting progress from one week to the next. With some weather/planting uncertainty still hanging over the corn market producers should consider pricing additional new crop bushels. The next week or two will more or less bring planting uncertainty to a conclusion. Producers should consider having at least 35% of their crop priced at this point in the season. If the planting progress report next Monday is on the high side of projections or exceeds projects downward price pressure will ensue. From a price risk management standpoint, a $5.60 September Put Option costing 37 cents would establish a $5.23 futures floor.
Soybean cash prices continue to be very strong as supplies are tight. Weekly exports were slightly higher than expectations with net sales of 13.3 million bushels (4.6 million bushels for 2012/13 and 12.7 million bushels for 2013/14). Overall, the May 16th export sales report was neutral for old crop soybeans and neutral to bullish for new crop. Brazil continues to experience loading delays at ports, further delaying soybeans entering foreign markets.
Soybean planting estimates for May 13th were 6% compared to 2% last week, 43% last year, and a 5-year average of 24%. The rally in soybean prices, due impart to sustained soybean exports to China and improvement in corn planting progress this week, should be looked at as an opportunity to increase the amount of soybeans producers currently have priced. Producers should consider pricing an additional 5-10% of their production under these favorable conditions or look to obtain downside price protection. Having a minimum of 25% of the crop priced at this point should be considered. Downside protection could be achieved by purchasing a $12.40 November Put Option which would cost 71 cents and set an $11.69 futures floor.
Weekly exports were slightly lower than expectations at net sales of 19.9 million bushels (4.6 million bushels for 2012/13 and 15.3 million bushels for 2013/14). Overall the report was neutral for wheat.
Nationally, winter wheat heading as of May 13th was reported at 29% compared to 20% last week, 73% last year, and the 5-year average of 51%. Crop condition ratings for winter wheat as of May 13th remained unchanged from the previous week at 32% good to excellent and 39% poor to very poor, compared to 60% good to excellent and 14% poor to very poor last year. Spring wheat planting reported May 13th was at 43% compared to 23% last week, 92% last year, and a 5-year average of 63%. Spring wheat emerged as of May 13th was 10% compared to 5% last week, 63% last year, and a 5-year average of 32%. World wheat supplies are expected to be larger than a year ago creating downward pressure on prices from the supply side. An estimated 9% decrease in US production is estimated to be more than offset by increases in production from Canada, Russia, the EU, and Australia. However drier conditions in Russia and Australia should continue to be monitored as well as planting progress in Canada, as if these production issues continue adverse yield effects will result. Currently producers should consider having a minimum of 30% of the 2013 crop priced. A $6.85 July Put Option would cost 22 cents and set a $6.63 futures floor.
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