The weather is washing concerns over the 2019 corn and soybean crops.
The recent rally in the corn market “is all weather related,” says Brian Hoops, a market analyst with Midwest Market Solutions.
Prior to the spring planting season, the market was flailing in the face of large worldwide grain supplies and the onslaught of bad news coming from the Trump administration concerning trade and tariffs. But the rain fell last fall, turned to snow in the winter, and didn’t let up this spring, leading to major flooding and all kinds of planting problems in areas ranging from Ohio to Nebraska.
As a result, planting has been slow and sprinkled with prevented plant and replant decisions, which were complicated by questions surrounding a government trade aid package and a government disaster aid package.
Hoops points toward large nationwide prevented planting numbers, saying they dwarf old records and point toward lower overall planted acreage. Add in the fact that the delayed planting season and difficult field conditions point toward lower yields, and you’ve got the recipe for a weather market.
One thing that is certain is the production risk for this crop is high. That should mean the market includes some risk premium, probably all the way until the first frost and beyond this fall, Hoops says.
Of course, there are still major concerns regarding trade and the administration’s continual tariff threats, Hoops says.
But this would appear to be a year that flexibility will be key when looking at any marketing plan, he adds. The risk premium is something to watch. And the market signals to store corn and beans could be worth watching. At the very least, this is looking like a year when it may be wise to use market tools to buy market protection.
Short crops tend to have long tails and Hoops reminds farmers that — at least in the United States — “there is just no way that we won’t have a short crop.”