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Morning markets: corn stays firm as more sowing hiccups loom

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Agricultural commodities found gains harder to come by on Tuesday, after data overnight showed that US farmers made brisk progress catching up on their delayed spring sowing plans.

The macro-markets picture offered little help, with Tokyo shares closing flat and the

dollar

a touch stronger against a basket of currencies, so making dollar-denominated assets such as crops that much less affordable.

And there was not too much for bulls to get excited about in US Department of Agriculture crop progress data which revealed, sure, that growers were behind in a range of crops, including the less mentioned ones such as rice and oats. (Peanuts and sorghum are the exceptions.)

But the delays were nothing that had not been forecast, even with corn at 63% sown compared with an average of 75% by now, and soybeans 22% planted, nine points behind the usual rate.

Canada dries

Sure, US spring wheat was only 36% sown, behind the average of 76%, with Canadian farmers struggling too, getting 20% of their plantings of all spring crops completed, compared with half typically by now.

Nonetheless, this represented quite some going, with only 4% in the ground a week ago.

"Favourable weather in Alberta and western Saskatchewan, as well as in parts of eastern Saskatchewan, led to a dramatic increase in seeding progress on the Prairies," the Canadian Wheat Board said.

"Farmers in drier areas of Manitoba, mainly in south central and south eastern parts of the province, have also begun to plant."

'Good for seeding'

Still, the question now is how much more catch-up farmers will be able to play this week.

In Canada, growers have a fairer wind behind them.

"Aside from a system that may create scattered showers in Alberta and parts of southern Saskatchewan, the forecast looks good for seeding into the long weekend," the CWB said.

While the US forecast is not quite so upbeat for growers, wheat futures eased in early deals, standing 0.3% lower at $9.07 ¾ a bushel for July delivery in Minneapolis, which trades spring wheat.

Chicago's July, soft red winter wheat lot eased 0.1% to $7.35 ¾ a bushel, with the USDA reporting a continued decline in the condition of the US winter wheat crop, for which the proportion rated "good" or "excellent" was trimmed further, by 1 point to 32% compared with 66% a year ago.

'Turned wet again'

For

corn

, rain looks set to call time out on sowings for much for the week, once again making fields too wet for farm machinery.

The Midwest "has turned wet again this week", Meteorlogix forecasters said.

"This will likely slow planting progress somewhat. Planting progress continues slow in the east due to prior heavy rains and with more rain in the area progress may continue to be slow."

July corn made another stab at taking the psychologically important $7-a-bushel mark, before losing some ground to stand 1 cent short as of 07:20 GMT (08:20 UK time), up 0.2% onteh day, while the December lot added 0.1% to $6.36 a bushel.

Squeezed crush number

Still, that was behind

soybeans

, which added 0.4% to $13.32 a bushel for July, helped by confirmation that soft National Oilseed Processors Association crush data on Monday was weakened in part by the exit of a South Dakota company.

"It has been confirmed that South Dakota Soybean Processors is no longer a NOPA member, with loss of their monthly data accounting for 2m-2.7m bushels of the shortfall" in the crush figure behind market estimates, Kim Rugel at Benson Quinn Commodities said.

Add it back, and the crush number of 123.33m bushels gets back at the bottom of the range of 124m-131m bushels that analysts had forecast.

Claim or plant?

Furthermore, there is some scepticism over the degree to which growers behind on corn plantings will actually switch to soybeans, which can be later sown, instead.

"At this point in time, farmers will stick with corn in North Dakota, South Dakota and Minnesota, especially on acres where fall fertilizer was applied," Mr Rugel said.

Soybeans are much less fertilizer intensive than corn, meaning that much of this application would, in essence, go to waste.

Then there will be temptation for growers to take insurance on unplanted corn and put their feet, up rather than sow soybeans. Insurance planting date on corn in the three states above begin to kick in next week, varying from May 25 to May 31.

By Agrimoney.com

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