Morning Futures Roundup
Too Much Of A Good Thing?
The old adage "rain makes grain" is of no solace to Corn producers east of the Mississippi, where an extremely wet spring has severely delayed Corn plantings in the key Corn producing states of Illinois and Indiana.
Yesterday’s weekly USDA’s crop progress report showed that 33% of the U.S. Corn crop has been planted, which is up 11% from last week, but still well below the 10 year average of 47%. Planting progress in Illinois, the second largest Corn producing state, was running well behind the 5-year average of 66%, with only 5% planted as of last week. Indiana was not much better, with 5% of the Corn crop planted vs. the 5-year average of 47%.
However, west of the Mississippi, producers are off to an excellent start this year, with Iowa, the largest Corn producing state, reporting 60% of the Corn crop has been planted. Progress was also above average in the major Corn producing states of Nebraska and Minnesota. Although producers are well behind getting in this year’s Corn crop, there is still time to catch up the next couple of weeks if the weather cooperates.
The potential for less than optimal yields tends to increase after May 15th, however, as a late developing crop could run into difficulties later in the growing season when frost and freeze concerns come into play. However, if rains continue to interfere with corn plantings, some producers may be forced to switch to alternate crops like Soybeans, forcing lower estimates for U.S. Corn production this season.
Looking at the daily chart for July Corn, we notice prices forming a wedge pattern as the market consolidates after last year’s sharp price decline from all-time highs. Near-term we remain above both the 20 and 100-day moving averages, which are both moderately bullish indicators.
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The 14-day RSI has turned more neutral, with a current reading of 57.65. The next major resistance point is seen at the January 6th high of 429.00, with support found at the April 20th low of 360.50.
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