Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
Silver Has Already Gone from Weak to Strong Hands - 15th July 19
Top Equity Mutual Funds That Offer Best Returns - 15th July 19
Gold’s Breakout And The US Dollar - 15th July 19
Financial Markets, Iran, U.S. Global Hegemony - 15th July 19
U.S Bond Yields Point to a 40% Rise in SPX - 15th July 19
Corporate Earnings may Surprise the Stock Market – Watch Out! - 15th July 19
Stock Market Interest Rate Cut Prevails - 15th July 19
Dow Stock Market Trend Forecast Current State July 2019 Video - 15th July 19
Why Summer is the Best Time to be in the Entertainment Industry - 15th July 19
Mid-August Is A Critical Turning Point For US Stocks - 14th July 19
Fed’s Recessionary Indicators and Gold - 14th July 19
The Problem with Keynesian Economics - 14th July 19
Stocks Market Investors Worried About the Fed? Don't Be -- Here's Why - 13th July 19
Could Gold Launch Into A Parabolic Upside Rally? - 13th July 19
Stock Market SPX and Dow in BREAKOUT but this is the worrying part - 13th July 19
Key Stage 2 SATS Tests Results Grades and Scores GDS, EXS, WTS Explained - 13th July 19
INTEL Stock Investing in Qubits and AI Neural Network Processors - Video - 12th July 19
Gold Price Selloff Risk High - 12th July 19
State of the US Economy as Laffer Gets Laughable - 12th July 19
Dow Stock Market Trend Forecast Current State - 12th July 19
Stock Market Major Index Top In 3 to 5 Weeks? - 11th July 19
Platinum Price vs Gold Price - 11th July 19
What This Centi-Billionaire Fashion Magnate Can Teach You About Investing - 11th July 19
Stock Market Fundamentals are Weakening: 3000 on SPX Means Nothing - 11th July 19
This Tobacco Stock Is a Big Winner from E-Cigarette Bans - 11th July 19
Investing in Life Extending Pharma Stocks - 11th July 19
How to Pay for It All: An Option the Presidential Candidates Missed - 11th July 19
Mining Stocks Flash Powerful Signal for Gold and Silver Markets - 11th July 19
5 Surefire Ways to Get More Viewers for Your Video Series - 11th July 19
Gold Price Gann Angle Update - 10th July 19
Crude Oil Prices and the 2019 Hurricane Season - 10th July 19
Can Gold Recover from Friday’s Strong Payrolls Hit? - 10th July 19
Netflix’s Worst Nightmare Has Come True - 10th July 19
LIMITLESS - Improving Cognitive Function and Fighting Brain Ageing Right Now! - 10th July 19
US Dollar Strength Will Drive Markets Higher - 10th July 19
Government-Pumped Student Loan Bubble Sets Up Next Financial Crisis - 10th July 19
Stock Market SPX 3000 Dream is Pushed Away: Pullback of 5-10% is Coming - 10th July 19
July 2019 GBPUSD Market Update and Outlook - 10th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

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

© 2005-2019 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

6 Critical Money Making Rules