The Hueber Report

Disappointed again! Both market bears and even more so, the farmers who are anxiously hoping to get crops planted received confirmation again yesterday as to just how challenging this spring has been.  Of course, of the two, only the bears are surprised as we have destroyed the common myth that we can plant the entire crop in this nation in a week’s time.  This belief did not develop overnight as for years the markets have grown complacent, thinking that with the equipment and genetics in use today, crops, and particularly corn, have become bulletproof, and like with any widely held misconception, it will be proven wrong and when it happens, the shock is sudden and often volatile.

This is not to say that progress was not made this week as producers in North Dakota planted 18% more of the intended corn, moving up to 81% complete and Wisconsin was able to plant 12% more corn, but here we are only up to 58% complete.  Nationwide, it was estimated that we are 67% complete, which would suggest that we still have around 30 million potential acres to go into the ground and needless to say, not all of them will, nor without freakishly great weather moving forward, can we expect to see exceptional yields.  

News services are sending out survey questionnaires for the June production and supply-demand reports, and while this number is always somewhat of a crap shoot, it should be rendered just about useless this year.  I have not heard about any plans for the USDA to issue any type of statistical estimate concerning acreage losses, and without this, it will, as they say, be worth the paper that it is printed on and considering most do not even print the report anymore, theoretically it is worth even less. 

I would be mistaken to leave bean out of the discussion, and while the window of planting opportunity is not closing quite as rapidly, I do not want to become complacent either.  The USDA reported that 39% of the crop is planted (versus 79% on average) which would suggest that there are still more than 50 million acres to plant, without even considering corn ground that could be switched to beans.  It is pretty easy just to assume beans acres will swell due to the delayed corn planting, but it would be premature to begin counting the chicks just yet.

Just a month or so ago, it seemed that the U.S/Chinese trade negotiation were moving along swimmingly and at the time, China made a few (possibly goodwill) bean purchases at that time, which reflect in the April import numbers.  For the month, they unloaded 1.75 MMT of bean from the U.S., which was 15.9% above the totals in March.  Granted, this only represents 30% of the 5.79 MMT they brought in from Brazil in April but is still a sight better than the beginning of the year.  There is one other tidbit concerning China this morning as they announced a temporary halt to beef imports from Brazil as a case of “atypical” BSE, more commonly referred to as Mad Cow was discovered in a 17-year old cow in the state of Mato Grosso.  As you might expect, the officials from Brazil have stated that they expect the suspension to be lifted quickly. 

Grain and soy trade all lifted higher in the overnight session in response to the planting reports but have since lost a bit of the enthusiasm.  It is interesting to note that corn has yet to push into higher highs for the swing, reconfirming just how stout a level of resistance we have run into (4.30 to 4.50) and as I have commented previously, a level that has stopped the upside of corn for five years now.  It would be premature to say we cannot press through this level, but obviously, the market is telling us we need more “proof” before that can be the case.