Soybeans were rallying through the February and March highs for the week of April 16 to take this market to new highs from the winter low. Corn prices were rebounding 20 cents from the lows in just a week. Granted, it is the time of year that we tend to see prices surge as farmers focus on finishing up last fall's fieldwork done -- including leftover harvest -- not to mention planting this year's crop.
The planting progress report should show Illinois 43 to 46 percent planted, Iowa 13 to 15 percent planted, Minnesota 4 to 6 percent planted and Nebraska 25 percent planted. The weather has gone from one extreme to another. Above-normal temperatures vs. cold, wet weather.
Exports have picked up in corn. Cheap prices have a way of curing cheap prices. The day before the rally started in earnest April 14, there were rumors that ADM was buying back delivery certificates for cash corn. Post-closing data that day showed ADM canceled 40 contracts registered for delivery. In the previous week, ADM and Cargill combined canceled 66 contracts registered for delivery.
I would find it hard to believe that they are low on stocks. Too much corn has had to move to the elevators because of poor quality. Either news of this or an expected announcement by the Environmental Protection Agency on mandate increases for ethanol would send the corn futures soaring. The March 1 stocks were increased and the carry-out on the supply and demand report indicates a number close to 2 billion bushels.
With poor quality and our anticipated need for China to import corn, the stocks could decline quite quickly. The world has a greater need for corn this year than last year. It also has a greater need for coarse grains as well. However, world and U.S. stocks of wheat are burdensome and are overshadowing the world's need of the former two.
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Planting is running earlier this year than the past two and in the past. The earlier the planters roll, the tendency for plant more acres increases. National Agricultural Statistic Survey has said it will resurvey North Dakota for corn acres harvested this spring and yields. I have heard good things about the yields. It went on to say it would perhaps revise or review the Dec. 1 stocks. In that report, corn in the fields were included in the numbers of corn on farms.
The world is changing. I tend to think we are very seasonal or traditional this year. Time will tell, but tradition would dictate that the grains would or should rally April to May. When I was at the Commodity Classic, I mentioned that I was looking for the market to rally into this timeframe. Richard Brock was next to me on the panel. He said, "you say that every year."
U.S. stocks are tight. Perhaps tighter than USDA estimates. However, because of the record crops from Brazil, Argentina and Paraguay, come last half of May to June, the stocks will be very tight in the United States -- should lead to good basis levels -- and very ample in the rest of the world. Yes, this year is much different from last year.
As President Obama ran his campaign on the platform of "change," hope was born among voters. Well, change not only is occurring in the Earth's behavior, it is in the commodities as well. However, change doesn't necessarily mean for the better.
