Best of the Week
Most Popular
1.Are UK Savings Interest Rates Finally Starting to Rise? Best Cash ISA 2017 - Nadeem_Walayat
2.Inflation Tsunami - Supermarkets, Retail Sector Crisis 2017, EU Suicide and Burning Stocks - Nadeem_Walayat
3.Big Moves in the World Stock Markets - Big Bases - Rambus_Chartology
4.The Next Financial Implosion Is Not Going To Be About The Banks! - Gordon_T_Long
5.Why EU BrExit Single Market Access Hard line is European Union Committing Suicide - Nadeem_Walayat
6.Trump Ramps Up US Military Debt Spending In Preparations for China War - Nadeem_Walayat
7.Watch What Happens When Silver Price Hits $26...  - MoneyMetals
8.Stock Market Fake Risk, Fake Return? Market Crash? - 2nd Mar 17 - Axel_Merk
9.Global Inflation Surges, Central Banks Losing Control and Triggered the Wage Price Spiral? - Nadeem_Walayat
10.Why Gold Will Boom In 2017 - James Burgess
Last 7 days
Top Ten US Dollar Risks - 27th Mar 17
The Popularity of Gambling and Investing Amongst Students - 27th Mar 17
Is Political Betting on the Rise? - 27th Mar 17
US Stock Market Consolidation Time - 27th Mar 17
Russia Crisis - Maps That Signal Growing Instability and Unrest - 27th Mar 17
Goldman Sachs Backing A Copper Boom In 2017 - 27th Mar 17
Foundation – Fall Of The American Galactic Empire - 27th Mar 17
Stock Market More Correction Ahead - 27th Mar 17
US Dollar Inflection Point - 27th Mar 17
Political Week Presurres US Stock Market - 25th Mar 17
London Terror Attack Red Herring, Real Issue is Age of Reason vs Religion - 25th Mar 17
Will Washington Risk WW3 to Block an Emerging EU-Russia Superstate - 25th Mar 17
Unaccountable Military Industrial Complex Is Destroying America and the Rest Of The World Too - 25th Mar 17
Silver Mining Stock Fundamentals - 24th Mar 17
A Walk Down the Dark Road of Bad Government - 24th Mar 17
Is Stock Market Flash Crash Postponed Until Monday? - 24th Mar 17
Stock Market Bubble and Gold - 24th Mar 17
Maps Of Past Empires That Can Tell Us About The Future - 24th Mar 17
SNP Independent Scotland's Destiny With Economic Catastrophe, the English Subsidy - IndyRef2 - 24th Mar 17
Stock Market VIX Cycles Set To Explode March/April 2017 – Part II - 23rd Mar 17
Is Now a Good Time to Invest in the US Housing Market? - 23rd Mar 17
The Stock Market Is a Present-Day Version of Pavlov’s Dog - 23rd Mar 17
US Budget - There’s Almost Nothing Left To Cut - 23rd Mar 17
Stock Market Upward Reversal Or Just Quick Rebound Before Another Leg Down? - 23rd Mar 17
Trends to Look Out For as a Modern-day Landlord - 23rd Mar 17
Here’s Why Interstate Health Insurance Won’t Fix Obamacare / Trumpcare - 23rd Mar 17
China’s Biggest Limitations Determine the Future of East Asia - 23rd Mar 17
This is About So Much More Than Trump and Brexit - 23rd Mar 17
Trump Stock Market Rally Over? 20% Bear Drop By Mid Summer? - 22nd Mar 17
Trump Added $3 Trillion in Wealth to Stock Market Participants - 22nd Mar 17
What's Next for the US Dollar, Gold and Stocks? - 22nd Mar 17
MSM Bond Market Full Nonsense Mode as ‘Trump Trades’ Unwind on Schedule - 22nd Mar 17
Peak Gold – Biggest Gold Story Not Being Reported - 22nd Mar 17
Return of Sovereign France, Europe’s Changing Landscape - 22nd Mar 17
Trump Stocks Bull Market Rolling Over? You Were Warned! - 22nd Mar 17
Stock Market Charts That Scream “This Is It” - Here’s What to Do - 22nd Mar 17
Raising the Minimum Wage Is a Jobs Killing Move - 22nd Mar 17
Potential Bottoming Patterns in Gold and Silver Precious Metals Stocks Complex... - 22nd Mar 17
UK Stagflation, Soaring Inflation CPI 2.3%, RPI 3.2%, Real 4.4% - 21st Mar 17
The Demise of the Gold and Silver Bull Run is Greatly Exaggerated - 21st Mar 17
USD Decline Continues, Pull SPX Down as well? - 21st Mar 17
Trump Watershed Budget - 21st Mar 17
How do Client Acquisition Offers Affect Businesses? - 21st Mar 17
Physical Metals Demand Plus Manipulation Suits Will Break Paper Market - 20th Mar 17
Stock Market Uncertainty Following Interest Rate Increase - Will Uptrend Continue? - 20th Mar 17
Precious Metals : Who’s in Charge ? - 20th Mar 17
Stock Market Correction Continues - 20th Mar 17
Why The Status Quo Is Under Increasing Attack By 'Populist People Power' - 20th Mar 17

Market Oracle FREE Newsletter

Elliott Wave Trading

U.S. Corn Crop - Too Cold or Wet Yet

Commodities / Agricultural Commodities May 01, 2013 - 04:49 PM GMT

By: Ned_W_Schmidt

Commodities

Let us start by remembering the most important aspect of Agri-Commodities. They are not produced in a factory. Corn, today's example, is produced by placing a seed in dirt with the proper amount of water and nutrients. Of that complete process nothing happens til the seed is planted. If no seeds are planted, no corn. All that happens only once a year.


To plant those corn seeds the soil must have the proper amount of moisture and temperature level. Too much moisture, which is the situation in a good part of the Midwestern U.S. corn belt, prevents the tractors from planting the field. Further, too much moisture creates soil conditions in which the corn plant will not prosper. The soil must also be at a temperature that is conducive to the seed sprouting.

When spring planting season arrives, the USDA's weekly crop progress report becomes important reading. This week the USDA issued the second weekly report on the progress of corn planting. In the above chart the red line is the percentage of the corn acreage that has been planted thus far. In the latest report 5% of corn acreage has been planted.

Black line is the historical average of corn acreage planting. On average 31% of corn acreage has been planted by the date of the latest report. While very early in the planting season, the current planting shortfall, actual versus average, is 84%.

The second chart (right) plots the corn planting shortfall, bars using left axis, versus U.S. corn prices, red line using right axis.

Going into the first report expectations for the U.S. corn crop were very high. Farmers were expected to plant a record number of acres and per acre production was to recover to trend line levels. The first report did not change those expectations as the wet and cold conditions were widely known.

The second report had an impact on prices as it raises questions about the size of the U.S. corn crop. Two reports, even as bad as these two, are not sufficient to overly worry about the U.S. corn crop. However, if the wet and cold conditions continue to impede planting of corn then expectations for the size of the U.S. crop will come down.

Starting with 28 April report, each week with a significant shortfall probably should reduce expectations by about 1%. That might not sound like much, but the U.S. does not have much corn in the bins. Before the combines hit the corn fields in September, the U.S. will only have 21 days of corn consumption in the bins.

As is apparent in the chart, corn prices rose on the latest report. Soybeans prices did likewise. Summer of 2013 has been our forecast for a major bottom in Agri-Grain prices. The problems that seem to be developing in planting the U.S. corn crop, while quite preliminary, support that view.

Tier One Agri-Equities vs S&P 500

Tier one Agri-Equities, pictured in the above chart, have been consolidating for about three months. That consolidation had developed in part due to the strong move of the Agri-Equities over the past year. Expectations of a massive U.S. corn crop also played a role in that consolidation.

Should Agri-Grain prices begin to move higher due to planting issues, the Agri-Equities may move out of that consolidation prematurely. In any event, we expect the consolidation to end by late July. Investors should now be doing their research on Agri-Equities rather than waiting till they move higher. AgriMoney would be a good starting place for that effort.

By Ned W Schmidt CFA, CEBS

AGRI-FOOD THOUGHTS is from Ned W. Schmidt,CFA,CEBS, publisher of The Agri-Food Value View, a monthly exploration of the Agri-Food grand cycle being created by China, India, and Eco-energy. To contract Ned or to learn more, use this link: www.agrifoodvalueview.com.

Copyright © 2012 Ned W. Schmidt - All Rights Reserved

Ned W Schmidt Archive

© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife