Storm Hampers Planting, Cools Plains

A strong storm system fueled by a strong low pressure system moving across the Great Lakes is funneling a continuous flow of moisture from the Gulf into the Midwest and Delta. Behind the front, much cooler Canadian air is trailing into the Plains states.\r\n\r\n Dodge City, Kan., is 38 degrees this morning with forecasts for a 35-degree low by sunrise. Wind-chill will take that down to 24 degrees, according to AccuWeather.\r\n\r\n Amarillo, Texas, is 42 degrees at 4:41 am CD, but by sunrise, this could be down to 35 degrees, AccuWeather said. A wind-chill factor of 34 will feel like 21 degrees at its low point.\r\n\r\n The storm system moving through the Nation’s midsection dumped rain on the central and eastern Plains on Monday and is forecast to fuel heavy thunderstorms from Texas to Ohio through Wednesday. The rain threatens to disrupt planting efforts across the region.\r\n\r\n The rain generally was welcomed in the Plains states where drought conditions have left soils parched and the winter wheat crop in need of a drink. The rain came too late to encourage a large crop, but will help fields that are heading now.\r\n\r\n \r\n\r\nWEATHER AIDS CORN, SOYBEAN PLANTING\r\n\r\n \r\n\r\n Dry, mild weather conditions last week helped farmers catch up with their corn planting. The USDA’s National Agricultural Statistics Service reported the crop was 59% planted, compared with just 29% a week earlier and the 58% five-year average. A year ago, just 26% was in the ground.\r\n\r\n Soybean planting also made giant strides last week, rising to 20% complete from 5% a week earlier. The average is 21%.\r\n\r\n The news should have been mildly bearish to prices, but overnight corn was higher as planting progress came in on the lower end of trade expectations. Some traders also remained cautious because progress in northern states remains well behind normal.\r\n\r\n \r\n\r\nBEEF TAKES A HIT\r\n\r\n \r\n\r\n Stung by weakening beef demand because of high prices and higher slaughter last week, wholesale beef prices moved lower. A small rise on Monday was not enough to turn the tide of a weaker trend.\r\n\r\n Some market analysts expect prices to decline into the fall as demand sinks seasonally and slaughter rates rise in response to higher first-quarter feedlot placements. If prices decline as expected, they will be following last year’s pattern where prices declined after the Memorial Day holiday buying rush into September.\r\n\r\n But at the same time, the choice/select spread is widening just as it did last year when it topped out around $20 in late May. It may be that demand for higher-quality beef may take this spread out to challenge last year.\r\n\r\n After all, beef prices remain above last year, indicating strong overall buying interest, even if current demand trends are softening. \r\n\r\n Slaughter steer prices last week were near unchanged at $146 per cwt on a live basis as packer buyers paid up to fill slaughter schedules to meet beef orders for the Memorial Day holiday. However, once these orders are filled, slaughter may ease back a bit, unless Independence Day demand picks up. \r\n\r\n Some July 4th buying has been done, but retail buyers may be waiting on Memorial Day movement to gauge how to fill in the last of their orders for the summer grill fest.\r\n\r\n The USDA reported its choice boxed-beef cutout Monday at $223.82 per cwt, up $0.56, while its select cutout value rose $0.43 to $212.64. The choice/select spread widened to $11.18, but there were only 69 loads of fabricated product moved into the spot market.\r\n\r\n The CME Feeder Cattle Index for the seven days ended Friday was $183.78, up $1.06, while the May futures contract settled at $184.60, up $0.02. June live cattle settled at $137.65, down $0.40.\r\n\r\n \r\n\r\nIN OUR OPINION\r\n\r\n \r\n\r\n–Although more countries likely will follow the lead of Egypt and Peru in banning Brazil beef after the discovery of an atypical case of Bovine Spongiform Encephalopathy, or Mad-Cow Disease, the bans may not last long.\r\n\r\n–Larger price divergence between Soft Red Winter and Hard Red Winter wheat is likely as drought continues to ravage large parts of the Plains and the southern Midwest receives rain.\r\n\r\n–Worsening drought may thwart plans to rebuild the cattle herd – again.