Mother Nature is making her seasonal appearance in Chicago Board of Trade markets and will be one of the big price drivers this week for grains. 
    
Planting time for corn is approaching in the Midwest and winter wheat, dormant since autumn, is reviving for a sprint to early summer maturity. But a freeze is forecast for the heart of the U.S. hard red winter wheat belt this weekend. In addition, the Red River Valley in eastern North Dakota, the heart of the spring-planted wheat belt, remains at risk of more flooding this month. 
    
The heart of the Corn Belt — Iowa and Illinois — could also be hit by a blizzard early this week, pushing back spring field work and delaying corn planting. Soy is planted later. 
   
“First, on Monday we’ll see a little bit of reaction to the weather that occurred over the weekend. We are especially going to watch potential frost freeze on Monday morning including the Delta and hard red winter wheat areas,” said analyst Terry Reilly at Citigroup in Chicago. 
    
Temperatures could dip into the low 20s degrees Fahrenheit in southern wheat regions such as the Delta soft red winter wheat fields of Mississippi and Arkansas, raising fears about “winterkill” damage to wheat and eventual yield loss. Still, wheat is a hardy grass and the season is still young. But any weather jitters could spur speculative buying and add to last week’s rallies.
    
On Friday, CBOT corn for May delivery <CK9> closed 4 percent higher on the week at $4.04-1/2 a bushel. May wheat <WK9> ended at $5.63-1/2, up 11 percent for the week, while May soybeans <SK9> rose 9 percent to $9.95-1/2. 
   
Part of that bounce in grains, especially soybeans, was due to the government’s U.S. shock planting estimates on Tuesday. The U.S. Department of Agriculture pegged soy plantings at 76 million acres, 3.6 million fewer than analysts expected. U.S. corn seedings were also forecast higher than expected at about 85 million, compared with 86 million a year ago. 
   
Each session after the report, soybean prices gained on corn with the price ratio between new-crop November soy and December corn closing at 2.12-to-1 on Friday — a big jump from a week earlier when it closed at 2.05-to-1. 
   
Historically, a ratio under 2.2-to-1 usually encourages corn seedings, while anything above tends to favor soybeans. 
   
“The cold, wet weather is underpinning corn. But it didn’t give it much of a lift,” said one CBOT floor broker. 
   
Some key areas of the Midwest have seen 200 percent of normal precipitation and remain too chilly to plant corn. Farmers like to wait for soil temperatures to reach 55 degrees (F) before planting. So far that zone is only as far north as Texas, eastward into the Delta region. 
   
USDA usually starts reporting U.S. corn planting progress by the second week of April, when 5 percent to 7 percent is seeded. But the agency will release its first crop progress update on Monday afternoon, with winter wheat conditions a key focus. 
   
“We are looking for above-average ratings for soft red winter wheat and white winter wheat, but below average for ratings for hard red winter,” Reilly said. 
   
Aside from the crop weather and daily conditions, outside markets will still play a role in grains — Wall Street stocks, crude oil and the dollar are keenly watched as touchstones that could point to economic recovery and, thus, potential demand. The fourth-straight weekly advance on Wall Street, with Dow Jones industrial average surpassing 8,000 on Friday — closing up 39 points at 8,017 — definitely buoyed commodity trader morale. 
   
“We did see some active fund buying (last) week,” said grains analyst Shawn McCambridge with Prudential Bache Commodities, who pointed to talk of money finally coming off the sidelines. 
Also of interest will be USDA’s monthly world supply-demand report due on Thursday morning. Traders will zero in as usual on projected end-season stockpiles, especially for soybean stocks this autumn given the smaller-than-expected March 1 U.S. soy stocks data that USDA reported last week.

Photo: Northeastern Iowa crop field taken by Christine Stebbins in late March. The region was hit by spring blizzard on Sunday, dashing farmers’ hopes of an early planting season.

At last year's American Petroleum Institute conference, Bill Klesse, CEO of leading U.S. oil refiner Valero, slammed federal policymakers who push subsidies and mandates for production of ethanol, saying that using corn to make it would make food so expensive it would cause more misery than global warming.

"All of these programs are just a huge transfer of wealth from our industry (oil) to the Midwest farms," Klesse said in March 2008 speech.

A year later, Klesse has decided to join rather than fight. If the money is going to the Midwest corn farms, why not cash in, right? Valero two weeks ago was chosen by a bankruptcy court as the winning bidder for two more VeraSun ethanol-producing plants.  The sale of seven former VeraSun plants closed on Wednesday and two more are expected to close soon.

A year and two weeks ago, Klesse said the federal government should stop favoring ethanol with subsidies. Now, Klesse and Valero are securing a supply of ethanol that it needs to mix with its gasoline.

"We expect increases in the Renewable Fuels Standard to continue," Klesse said two weeks ago when Valero's bid for VeraSun's plants was awarded.

The plants, in Iowa, Minnesota, South Dakota, Nebraska, and Indiana together will have a combined capacity that is 7.5 percent of the current operating U.S. ethanol capacity.

On Thursday, a Valero spokesman said the company needs to go full throttle on producing ethanol to mix with its gasoline. See the Reuters story.

(This is a photo of an ethanol plant taken in 2008. Reuters photo by Mark Blinch.)

Democrats floated big plans to tackle climate change proposals in the U.S. Congress this week but realistically there will be much more hot air — both from industry and politicians — before this bill is turned into law.
 
The draft legislation, running hundreds of pages, will now be considered by the House Energy and Commerce Committee in coming weeks along with all manner of panels. And, oh yes, the Senate, home of the filibuster, will also get to weigh in.
    
At the heart of of the legislation is Cap and Trade — a panacea for those who believe greenhouse gas emissions are warming the planet to dangerous levels and a boon to those who think the sinking economy makes this the dumbest time to anchor industry with more costs.
    
“This legislation will create millions of clean energy jobs, put America on the path to energy independence, and cut global warming pollution,” said House Energy and Commerce Committee Chairman Henry Waxman.
    
Sounds good but Waxman is a Democrat from California, where these ideas are more readily embraced.  
    
Listen to what a guy from Texas thinks: “Tuesday’s cap and trade bill marks a triumph of fear over good sense and science and it couldn’t come at a worse time because it proposes to save the planet by sacrificing the economy,” said Representative Joe Barton, the senior Republican on the energy and commerce panel.
 
In a cap and trade system, power plants and other industries would need permits for every ton of carbon dioxide they emit. Unused permits could be sold to other companies, but overall emissions would gradually drop.
    
Under the proposal that uses 2005 as a base year, U.S. carbon emissions would have to be reduced by 20 percent by 2020, 42 percent by 2030 and 83 percent by 2050. Those goals are a tad more aggressive than what President Barack Obama had proposed.
    
Now let the games begin. Very few seem ready to predict when a climate change bill will pass but most say it won’t be this year — especially if Democrats in Congress decide to give Obama’s health care plans the priority.
    
So there certainly will be a lot more talk, much of it heated. And one other thing is for certain: each yearly delay will mean the United States, as the world’s largest emitter, will spew another 6 billion tonnes of carbon dioxide into the atmosphere.

For more Environment News, click here.

Photo Credit: Reuters/Eric Thayer (The Empire State building in New York turned off its lights on March 28 at 8:30 pm local time, joining homes, office towers and landmarks in more than 80 countries that signed up for Earth Hour to raise awareness about climate change); Reuters/Chris Baltimore (An aerial photograph of a power plant in Georgia)