(Farm and Ranch Guide) – Following a shaky start, U.S. corn plantings moved into high gear before the end of May.
Corn farmers had 65 percent of the corn planted as of May 18. On average, U.S. farmers have 90 percent of their corn planted by late May, and it appeared likely the May 27, 2014 report would show plantings near that level.
With the Drought Monitor indicating lessening drought across the Corn Belt, the corn was expected to grow well.
“We have made good progress across most of the Corn Belt, and the northern states – North Dakota, Minnesota, Wisconsin and Michigan – are really the ones that are behind in progress,” said Randy Martinson, Progressive Ag, Fargo, N.D.
Farmers were not willing to “mud” in the corn, but when the sun and warmth arrived, the soil became fit quickly. That allowed farmers to make tremendous progress.
With great potential for high yields, the futures corn market took back some dollars it had offered in early May.
On the CME Group for May 23, the July future traded at $4.79, September was $4.76, December was $4.755, March was $4.85 and May was $4.91 per bushel.
Compared with prices on May 9, July was 29 cents lower, September was 25.5 cents lower, December was 23.5 cents lower, March was 21.5 cents lower, and May was 20.5 cents per bushel lower.
The U.S. weekly corn exports number for May 22 was 570,400 metric tons (22.4 million bushels) bringing U.S. corn export commitments to 93 percent of the USDA’s estimate – right in line with the average commitment by this point in the marketing year.
With the corn supply looking sufficient in May, the market struggled to find any news to keep corn prices from moving lower.
At one elevator in western Minnesota followed in this column, cash corn on May 23 was $4.12 per bushel with a basis of 67 cents under.
Compared with prices on May 9, corn was 26 cents lower and the basis narrowed by 3 cents.
“The market is at support (level),” said Martinson. “We did a 50 percent retracement back up from our recent highs to our recent lows. Because of the good planting progress and the good conditions through most of the Corn Belt, corn is struggling to make that rally.”
Good conditions for wheat production were also taking corn prices lower.
“We are looking at better planting progress up here, we’re looking at rain down in the Southern Plains, so the wheat market is also adding to the pressure keeping corn from doing a lot.”
With strong supplies and lower prices, demand for corn could increase.
“The soybeans are running wild, and we have to see a little bit of a connection between corn and soybeans,” he said. “The push that is happening in soybeans should spill over and give corn a little bit of life.”
Ethanol demand in 2014 is expected to stay similar to 2013, with the renewable fuel standards in place.
Feed demand and corn exports remain the market’s wild cards. While poultry feeding is strong, cattle and hog numbers are more variable. High soybean meal prices could also lead livestock feeders to look more toward distillers grains and alternative feedstuffs to meet the protein needs of their livestock.
Corn exports are another unknown.
“We can see them come and go just depending on what our price does, or the dollar does,” Martinson said. “Right now, we are projecting a fairly good number for exports for next year.”
At grocery stores across the U.S., consumers are noticing higher prices in almost all departments – especially at the meat counter. Depending on the economy, consumers may decide to cut back on their meat purchases and that could have ramifications for livestock and grain prices down the road.
The impact of higher prices for end users is not expected to have a short-term impact on corn prices, and it remains to be seen what impact U.S. consumers have on commodity prices over the long run.
