As I write this update, local planting progress is beginning to accelerate, even under less-than-ideal conditions. Unseasonably cool temperatures have kept many growers waiting for warmer weather, but with little relief in the forecast, the calendar dictates it’s time to move forward.
Nationally, U.S. corn planting progress stands slightly ahead of the five-year average. With average to below-average precipitation forecast in many areas, planting should continue with minimal delays. Corn markets have rallied solidly since the January lows. Managed money has built a decent net long position and retains room to add more. Fundamentally, we continue to carry ample old-crop supplies, yet demand remains excellent on both the export and domestic fronts (feed and ethanol). Crude oil prices have nearly doubled since the start of the Iran conflict, making ethanol highly competitive both domestically and in foreign markets.
Dry conditions are a growing concern across western states including Nebraska, Kansas, and the southern half of South Dakota. These areas will need timely rains to support emerging crops. Meanwhile, declining U.S. wheat condition ratings are lending additional pricing support that is spilling over into the corn market.
We are also heading into an El Niño summer, which historically brings hotter and drier conditions to parts of South America. Mato Grosso in Brazil is currently trending dry—a key area to watch in the coming weeks as the market focuses on the developing safrinha corn crop.
Please feel free to call with any questions regarding shareholder delivery or to discuss the various contracting options available at CVEC. Note that sign-up for the Flexible Pricing Option for next year’s shareholder delivery will begin in mid-July. Sign-up information will be mailed out with Benson Corn Pool enrollments and will be due by the end of August.