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The corn crop insurance date looms as wet weather continues to stall planting

By Doug Tenney, Leist Mercantile

June 5 is the last corn plant date for Ohio producers to have full coverage on their crop insurance in place for 2019. After June 5, producers will lose 1% of coverage each day for corn planted after this date. The late plant period for corn will end on June 25. Much talk has already taken place in recent days as prevent plant options are thoroughly reviewed to see the best option for this year. Early May saw market talk of corn acres switched to soybeans. U.S. prevent plant corn acres could set a record this year. Why? Producers are extremely reluctant to switch those corn acres to soybeans with November CBOT soybeans mid-May falling below $8.50, which translates into fall delivery soybeans below $8 at the vast majority of Ohio grain facilities. The thinking is: “Why would I plant soybeans only to lose more money if weather is not a threatening factor this summer?”

Some have already suggested soybean prices this fall could easily drop below $7. The world is awash in soybeans, easily obvious when you remember the US soybean ending stocks on August 31, 2019 is very close to one billion bushels. South America soybean production has been strong this spring. Soybean imports into China have fallen below those of last year.

In addition, with the African swine fever in China still running rampant, China’s soybean imports could fall further. The lack of the U.S./China trade deal could jeopardize U.S. soybean sales already on the books. If demand continues to fall, U.S. exports could slip even lower in the months to come. USDA projected the ending stocks at 995 million bushels as exports were lowered 100 million bushels from the April report.

Grains rallied mid-May after making new contract lows for soybeans and wheat. The low corn planting progress of 30% along with a wet planting season to date and a continued wet forecast played key roles in pushing corn 30 cents higher in just one week on May 17. Already at that date, market talk was suggesting reduction of 3 to 5 million corn acres and a 3- or 4-bushel lower corn yield due to late planting. Hints of lower corn production anywhere from 300 million bushels to one billion bushels also helped push corn to levels not seen much this spring.

The rally, which started mid-May, was a supply-led rally. Those rallies are extremely difficult to trade as they can end as abruptly as they began. Conversely, demand driven rallies can gain steam and last far longer than anyone imagined. As I conclude this column mid-May, the Midwest weather forecast into early June calls for more of the same with above normal rainfall expected.

As the corn supply from 2019 production looks to shrink as detailed above, keep in mind usage could also be shrinking as well. Record corn production from South America has the potential to be exported to current U.S. customers.

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