Deferred U.S. corn and soybean futures stumbled on Tuesday as forecasts for a pause in rainy weather raised expectations that farmers will follow through on plans for massive plantings.
Traders are keeping a close eye on the weather because cool, wet conditions have slowed planting so far this spring, fueling fears that farmers would not plant as many acres as expected.
The latest forecasts “suggest that we’re going to catch up and we’re going to get a lot of grain planted,” said grain analyst Tim Hannagan of Walsh Trading.
“The planting window won’t open all the way, but it’s going to be about three-fourths open,” he said.
Chicago Board of Trade December corn, which represents the crop that will be harvested this autumn, fell 1.3 per cent to $5.53 a bushel, after losing 1.3 per cent on Monday. November soybeans slipped 0.7 per cent to $13.16 a bushel (all figures US$).
The U.S. Department of Agriculture said in a weekly report on Monday that the U.S. corn crop was 91 per cent planted as of Sunday, up from 86 per cent a week earlier but behind the five-year average of 95 per cent. Soybeans were 57 per cent planted, up from 44 per cent the previous week but far behind the five-year average of 74 per cent.
“The progress report indicated that the corn is gradually getting planted, and there looks like a window of opportunity for producers later this week,” said analyst Tomm Pfitzenmaier of Summit Commodity Brokerage.
“If the weather straightens out after this midweek rain and allows planting to progress, then the bean price may be as high as it needs to be for this run,” he said.
With worries easing about planting, traders are beginning to shift their focus to how weather will impact the development of crops.
In its first corn condition ratings of the season, USDA on Monday said 63 per cent of the crop was good to excellent, which tied with 2008 for the lowest rating at this time of year since 2002.
Traders in the market will “keep on removing weather premium as long as the weather looks good for crop development,” said Brian Hoops, president of Midwest Market Solutions.
Spot July corn rose 0.7 per cent to $6.60-1/2 a bushel, underpinned by tight nearby supplies. July soybeans lost 0.2 per cent to $15.28-1/2 a bushel in a setback from gains on Monday.
USDA’s state reports on Monday said heavy rains fell in the last week from North Dakota to Indiana, with some areas receiving 15 cm in the week. Deadly tornadoes and flooding struck in Oklahoma.
The precipitation eased drought conditions in parts of the southern Plains winter wheat belt. USDA said 32 per cent of the U.S. winter wheat crop was rated good to excellent, up one percentage point from the previous week.
July wheat ended near unchanged at $7.09 a bushel.
Heavy rains have stalled barge traffic on a flooded stretch of the Mississippi River, but relatively few vessels stood waiting at the channel’s system of locks on Tuesday as shippers had received ample warning of the rising water.
Some 60 per cent of all U.S. grain exports is transported via the Mississippi River and its tributaries from farm areas in the Midwest to export terminals at the Gulf Coast.
— Tom Polansek is a Reuters correspondent covering agriculture and futures markets in Chicago.