April showers bring May flowers? I sure hope so! Moisture this week and some sunshine soon will be the perfect recipe for crops to shoot up this spring. This past weekend a friend and I were able to travel to Western Nebraska to see some other friends. Our destination was 14 miles south of Hay Springs, and it seemed as though we experienced two different seasons along the way. This was not our first trip out west that we experienced moisture along the way, in fact, it has either rained or snowed almost every time we have visited. As we traveled, I was amazed at the standing water in the pastures and ditches. Everything was starting to green up, and it looks like they are off to a good start this spring. A little sunshine and they should have some nice pastures soon.
The market has taken in a little bit of the weather news and traded accordingly over the past couple of weeks. It wasn’t more than one full week ago that we were talking about heavy rains in Argentina which was driving the soybean market higher. The market was talking about 5% of the soybean crop in Argentina being completely destroyed by the heavy rains, and the ports were experiencing delays. Sure this helped with the markets, but it wasn’t the only thing that kept our recent rally going. The funds jumped in and started buying which pushed us another leg higher. Pair both of these happenings with the USDA increasing soybean export demand in their latest adjustment to the balance sheet last week and we still have strength in the soybean market. At some point, we will shift our attention back to the fundamentals in beans, which means the carryout for the ‘15/’16 crop year may continue to grow.
Corn has been a little bit slower to rally and hesitant to follow soybeans higher. Soybeans have moved over $1 higher since the first of March vs. corn’s movement of $0.29 over the same period. Corn is currently trading at levels which we haven’t seen since before the Christmas holiday. The futures are starting to give us a little bit of movement that we were missing out on, but basis has been on a slippery slope. Greg talked about basis risk last week, and this continues to be something we want to focus on. Use your best risk management skills and know what your needs are to sell or move grain over the next few months and plan accordingly.
What does this mean and how long will the markets hold their strength and continue to trade at new highs? This is the million-dollar question that I wish I could answer. Planting got started in some areas of CVA’s trade territory last week and into the weekend. The current rains are going to keep us out of the field for a little while this week. Will this have an impact on the markets moving higher? I am of the belief that there is still plenty of time to get back in the fields and get everything planted. We will know more in the next couple of weeks and where we are sitting. In the meantime, stick to your marketing plan and have offers in place. The market may continue to surprise us, or it may slip out from underneath of us when we least expect it.
Good luck and have a safe planting season!