Planting Progress Takes Center Stage as Markets Struggle to Find Price Support.

A weekend in the field    

I grew up on a farm in Warren County, Iowa, that my father, 4 brothers and I still operate. Corn & soy rotation & a decent cow/calf operation on the pastureland. The operation has steadily grown over the years, the John Deere 6 row planter has been replaced by  Kinze 12 row corn and 23 row bean planters, and this time of year my brothers and I receive numerous texts & reminders from dad looking for someone to take time off work to operate when the weather demands. Needless to say, the weekends are just weekdays at our second job for my brothers and I, one that we very much enjoy.

I spent Saturday in the tractor planting beans, my 7-year-old son nodding off next to me from time to time in the buddy seat. Anyone who is familiar with southcentral Iowa knows that we have rolling hills, a lot of terraces, intakes, & waterways. This makes the planting process more of an active participation event for the operator than in some flatter parts of the state. A lot of steering, lifting, paying extra attention to the marker arm, etc. The conditions were decent Saturday morning, chilly, overcast, but the ground was dry as a cloud of dust followed steadily behind the planter. Light showers between 3pm-7pm eventually led to an early end to the day around 4:30pm as the planters drive wheels started picking up a light layer of mud. With a decent forecast for the week ahead there was no reason to push the equipment. My brother took over Sunday and ran the full day, which given cool temperature & 40mph wind gusts, made for a decent day in the cab with his son, also 7 years old, now occupying the buddy seat, watching the GPS as the bright green unplanted area turned to black behind the planter on the screen.

5/1/2023 Planting Progress Report

The updated planting progress report, updated today, Monday, May 1, 2023, showed significant progress across the corn belt.

Corn: Iowa planted corn acres jumped 19% week on week to 29% planted, while total U.S. Corn acres planted jumped 12% on the week to 26% total which is in line with the 5-year average. 

Beans: Iowa bean acres jumped 11% week on week, coming in at 16% planted, while U.S. Bean acers planted jumped 10% for the week to 19% total, which is well above the 5-year average of 11%.

Markets

As for markets, new crop corn has struggled to find any support in recent weeks as the bears are out in full force. Funds are net short corn and continue to push the market lower given the lack of outside threats to new crop and a weather forecast that supports continued fieldwork across much of the corn belt. A look at the COT report below shows managed money liquidating positions across corn, wheat, and the soy complex week on week. New crop contracts for both corn and soybeans have broke well below their 50 and 200 day moving averages, putting us squarely in bear territory (when the 50 day moving average (Blue) crosses the 200 day moving average (Red) to the downside it is considered a strong indicator that the underlying commodity has slipped into a bear market, a sentiment echoed by the charts below). It has become painfully evident that a meaningful correction higher will likely require an event to tangibly impact the balance sheet by threatening production.

Commitment of Traders Report – Managed Money Positions (Reported on Fridays for the prior Tuesday.)

December Soybeans 50 day moving average (Blue), 200 Day moving average (Red)

December Corn, 50 day moving average (Blue), 200 Day moving average (Red)

Marketing Plan?

Understandably, pulling the trigger on forward sales at these levels is extremely unattractive and the temptation to roll the dice on growing season weather markets providing a rally is significant, if not warranted, however using pricing tools to protect against continued lower futures moves has been, will likely continue to be a wise investment until we can find some support.