By The Time You Read This …

Reflections on issues that will influence commodity prices

By the time you read this, the weather situation in South America will have subsided, harvest largely wrapped up for both Brazil and Argentina, and Brazil’s second corn crop (safrinha) will be in the ground and growing. We will have a better idea of the damage South America’s summer (our winter) weather did to crops, most notably Argentina’s soybean production.

Given its status as the world’s largest exporter of soybean meal, followed by Brazil, the short-supply scenario that sparked a near-$60-per-ton rally in soybean meal futures from December through February will either be confirmed or disproved. That means the U.S. grain and oilseed complex may have come back to earth to deal with its own large ending stocks or continue on into the stratosphere, as long-term monthly charts for both soybeans and bean meal would suggest.

By the time you read this, the U.S. winter wheat crop will have broken dormancy, and we will know a little more about the crop’s prospects for this summer. You’ll recall I refer to wheat as “the cockroach of the grain world” because of its ability to withstand multiple deaths each and every year.

This time, though, things could be different, particularly for the HRW crop of the U.S. Southern Plains. This past winter was vicious: little to no precipitation from early fall through late winter, temperatures that ranged from subarctic to springlike and unrelenting winds. Reports from the area indicate the crop looks to be in worse shape than memory served. We will see if it can come back one more time.

By the time you read this, USDA’s much-anticipated late March “Prospective Plantings” report will have come and gone. Like Groundhog Day--and nearly as meaningful-those in agriculture await the release of what USDA guesses spring crop acreage will be, marking the unofficial start to the planting season.

As I made the speaking tour rounds during the winter, I found that most Midwest growers were not going to reduce corn acres despite the soybean market’s attempt since last autumn to buy acres away. The U.S. likes to plant corn, a fact that was proven time and time again as I asked the audience for a show of hands during my winter presentations. However, there were some diverging views further north when I spoke in Fargo and down south when I talked to farmers at a cooperative meeting in El Campo, Texas. The former was leaning toward more spring wheat acres, while the latter favored an increase in cotton.

By the time you read this, the calendar will read April. Daylight saving time will have begun (March 11) and Good Friday passed. It might be the day after Easter here in the U.S., meaning the day after April Fool’s Day, as well. Time continues to move forward, seasons come and go, changes keep happening in our day-to-day lives, be it weather, markets, jobs or life in general. This year will be no different, with all that is ahead of us still a great unknown, vulnerable to the chaos theory, meaning the butterfly effect and black swans will be seen.

By the time you read this, I’ll be done.

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