Spring signals and market swings

By Doug Tenney

Last month, I stopped at the new Ace Hardware store in Lancaster with no list — just curiosity about the brand-new location. Before long, I found a tomato stake that worked perfectly to support a vine Cindy had attached to a trellis. I also realized I needed a replacement for a broken plastic bolt on a house shutter. The sales clerk quickly identified it as a “shutter pin.”

I was impressed by their knowledge. Even more so when I overheard a phone call with another Fairfield County store 15 minutes away: “The shutter pins are in aisle 10, left side, at the end of the aisle. Here’s to a successful planting season with everyone in your operation able to understand exactly where those planting supplies are located.  

Mid-April is upon us, and planting activity across Ohio should be hitting its full pace at this time. Many producers will be anxious to get soybeans planted before corn. The trend continues to grow, with more producers adopting this agronomic shift in their planting calendars. Numerous crop insurance companies this spring and in past years have enabled producers to buy replant coverage of 10 days or more ahead of the normal date for their respective Ohio county. Yes, there was an extra charge for this coverage. Many producers felt this additional coverage was a strong benefit for their operation.

When you read this column, stop for a moment and ask, “Is the U.S.-Iran conflict still ongoing?” If you answer “yes,” one could easily anticipate the conflict being months in the making. What gets lost is the time it takes to deploy military assets to their proper locations. It includes many classes of Navy vessels, from cruisers to submarines and aircraft carriers. Don’t forget that military assets include soldiers, or as what civilians have called it for decades, “boots on the ground.” If your answer was yes, it could result in months of extreme price volatility for both soybeans and corn, as they are trading as energy components.

On Sunday, March 8, and Monday, March 9, crude oil traded over a $30 range, and grains peaked in the first six hours of trading during the Sunday evening grain session. I talked earlier about the significant amount of crude oil short covering as traders bought back their short positions in large volumes. Then, less than a week later, when President Trump declared, “the war is virtually over,” crude oil was $10 lower.

Remember the crazy weather the last two weeks of March? The question soon became – is spring coming or going? Yes, multiple times was the reality. I was mowing my lawn on one of those warm, sunny 70-degree days before St. Patrick’s Day. Then, within two days, below-freezing temperatures combined with strong wind gusts brought wind chills near 20 degrees.

Above-normal precipitation in the last two weeks of March has the potential to reduce the time available to top-dress wheat in much of Ohio. On March 27, the next ten days for central Ohio were projected to receive 3.25 inches of rain. If those rains occurred, it could result in poor-quality wheat and reduced yields. In addition, weekly crop progress reports began on April 6. Wheat crop condition ratings will be analyzed for their good and excellent totals, and the rankings will be compared with previous years. In addition, later in April, planting progress for corn and soybeans will be detailed on Mondays at 4 p.m.

Last month, U.S. soybean crush margins reached $2.70 per bushel, a three-year high. Soybean oil remains even more valuable in determining crush margins. If crude oil prices continue to rise, Congress has both the opportunity and the incentive to establish a strong biofuels policy.

Two dates to put on your calendar are of major importance. First, President Trump and Chinese President Xi rescheduled their meeting in Beijing for mid-May. Second, the new Louis Dreyfus soybean crushing facility in Upper Sandusky should be operational later this summer. It will be a huge basis driver for Ohio.

In the United States, a strong El Niño is anticipated to begin in June. If that happens, it often results in a drought across the Eastern U.S. Corn Belt. That’s not good for Ohio’s producers, as the previous two years have been disappointing.

Thought for the day. “Despite the forecast, live like it’s spring.” –  Lilly Pulitzer.