What Next?

After delays, planting is rapidly catching up. Although concerns about planting delays were voiced, grain prices never really reacted. The corn and soybean seasonal planting time spring rally (mid April to early May) wasn't! Market prices have continued their downward path in spite of wet conditions in many areas and planting delays. What can we expect now?

Corn and soybean prices usually trend down through early June after the crop is planted and gets started growing. Dry and/or hot weather can provide an early summer rally before July 4^th, but it may not happen. The market has focused on the large grain supplies and didn't appear concerned about late planting effects on production. The La Nina appears to be weakening again and the summer weather risks associated with it may be reduced. The market just continues to focus on large supplies that are believed to be adequate, even with some weather problems. If the weather is good, the supplies will grow and prices may continue to decline. Some analysts are looking at pre-1973 price levels! Until these ideas change, market rallies will be hard to come by.

Are the markets underestimating the effect poor weather could have on supply? Some analysts suggest that dry weather could reduce production more than most are assuming. Most projections only trim a few bushels off of national average yield when dry weather scenarios are run. These analysts point out that drought years often have much greater yield loss than most current "dry weather examples" are using. Significant yield loss would tighten supplies and result in volatile prices. So, while weather isn't big news yet, it could be and higher prices aren't completely out of the question.

Corn and soybean prices have been in a downtrend for more than two years! Prices can only be described as low and eventually they will bottom out. The only questions are when and at what prices? Right now, it appears that the most likely event to change price direction is dry weather. This will be answered in the next couple of months.-- Melvin

** Note ** June 1 is the last date to place 1998 corn and soybeans under loan or take the LDP. This is the last chance to claim an LDP on any remaining old crop soybeans. The CCC loan also offers price support protection on any old crop corn still in storage.

Decisive Marketing - May 28, 1999
http://outreach.missouri.edu/agconnection/DCT/DM990528.html -- Revised: April 20, 2004
breesm@missouri.edu