Views on commodities and energy
Too Much of a Good Thing: Rain
It’s an old saying on LaSalle Street that “rain makes grain.” But too much of a good thing this spring could end up to be a real drag on U.S. crop yields if Midwest farmers can’t get their corn planted by the middle of May.
That was the worry among CBOT grain traders late this week as the heart of the U.S. Corn Belt can’t seem to break into spring.
By far the wettest areas of the belt were the southern Midwest and Mississippi Delta, where farmers would typically be planting corn this week. Heavy spring rains, causing rivers to swell and fields to flood, has kept farmers sidelined.
Much of the northern Midwest, including northern Indiana, Illinois and Iowa, was also soggy. But planting typically doesn’t get started there for a few more weeks.
The planting delays boosted corn prices most of the week. But some extended forecasts for the 11- to 16-day period looked a little drier on Friday, feeding end-week profit-taking in corn.
New-crop December corn <CZ8> closed down 1-1/2 cents at $6.08-3/4 per bushel after notching a contract high of $6.12 on Thursday. The spot month <CK8> traded above $6 a bushel for the first time ever on Thursday, buoyed not just by the planting weather but by Monday’s sharp cut in the government’s projected U.S. corn acreage in 2008.
“Already there’s some second guessing about next week’s weather,” said Joe Victor, an analyst with Allendale Inc, a farm advisory firm in Illinois.
Some weather forecasters on Friday were calling for three waves of rains next week. Updated models called “for the heaviest wave next week may be going a little south and away from the major Midwest,” Victor said.
Along with weather forecasts, traders will tune into USDA’s first weekly crop progress report to be issued on Monday afternoon. The general feeling among traders and crop specialists is the U.S. corn seeding is several weeks behind schedule in the southern production belt.
While there’s still plenty of time to plant both corn and soybeans, U.S. farmers have hoped to get a jump start this spring so crops maximize yield potential given the strong global demand for grains and oilseeds.
Corn yields, for example, can typically drop 1 to 1.5 bushels per acre per day in Illinois and Iowa for every day that fields are planted after mid-May.
“From our vantage point, we’re two to three weeks behind schedule. Those delays will likely move northward into mid-May to early June,” Greg Soulje, chief meteorologist with This Week in Agribusiness & Brownfield Network said this week at an agricultural conference in Chicago.
Photo: Northern Illinois the last week in April. Photo by Christine Stebbins