Chicago corn futures shot higher again Tuesday as planting worries mounted and trade issues seemed no nearer a solution. As a result, feeder cattle futures dropped.
Keith Good, social media manager for the University of Illinois’ Extension Service newsletter, FarmDoc, said, “With June just days away, producers are sorting through both known and significant unknown variables, in an effort to figure out how to maximize returns on their operations.”
Good listed some of their concerns, many of which may have farmers contacting their brokers about the hedging possibilities.
PLANTING WELL BEHIND AVERAGE
The USDA’s National Agricultural Statistics Service said in its Weekly Crop Progress report Tuesday that the US corn crop was only 58% planted, 32 basis points behind the 2014-2018 average of 90%.
Notable corn-producing states that are behind average are Illinois, with 35% done, compared with the average of 95%; Indiana with 22% done, compared with the 85% average, and Iowa with 76% done, compared with the 96% average.
The USDA’s Agricultural Marketing Service said analysts were very much concerned about how many acres will either go through a prevented planting scenario or move from corn to soybeans this growing season, Good said.
And that’s not all, there are various reports of swollen rivers delaying barge traffic on the Mississippi River and its tributaries, which hampers the timely flow of exports.
Good also pointed to comments by Jim Rouiller, chief meteorologist at the Energy Weather Group who said the near-term medium-range weather models pointed to this weather pattern persisting into mid-June, which many would consider to be too late for corn.
DECISIONS, DECISIONS
To add insult to injury, producers are grappling with protracted US/China trade talks, prompting talk from President Trump about financial aid. But there’s a wrinkle.
“Recall that farmers will have to plant a crop this spring to be eligible for the Market Facilitation Program payments ant that the USDA has not disclosed what the MFP payment rates will be,” Good said. “The payments will not be based on a specific crop, will vary by county and will be based on the number of acres planted.”
However, it looks like Prevent Plant payments will be separate by definition.
Farmers in areas where the insurance deadline for sowing has already passed in southwestern Missouri, southeastern Kansas and western Tennessee will have to decide whether to plant with less coverage or make prevent-plant claims, said Bloomberg writer Michael Hirtzler in an article last week.
The myriad of alternatives are very confusing for farmers. Each has the potential to be a real bad decision.
CATTLE FEEDERS LOOKING FOR FEED
Another market analyst said the rapid rise in corn prices likely has cattle, hog and poultry producers looking to secure corn before prices get too out of hand. Many also may be looking to secure feed needs through the futures or options markets.
Whatever. It’s going to be bumpy.
CATTLE, BEEF RECAP
Cash cattle trading was reported last week in the Plains at $114 to $116 per cwt, mostly $115, on a live basis, down $1 to $4 from the previous week. Dressed-basis trading was seen at $185 to $186 per cwt, down $4 to $5.
The USDA choice cutout Tuesday was up $1.65 per cwt at $223.29, while select was up $1.98 at $210.45. The choice/select spread narrowed to $12.84 from $13.17 with 70 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Monday was $136.55 per cwt, up $0.50 from the previous day. This compares with Tuesday’s Aug contract settlement of $141.22, down $1.00.