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CME: Corn Price Main Worry

by 5m Editor
21 May 2008, at 7:51am

US - CME's Daily Livestock Report for 19th May 2008.

Corn planting conditions and the overall outlook for feed supplies remains one of the principal preoccupations for livestock producers this spring. As with $3 gasoline, memories of $4 corn suddenly seem so quaint. Now the main worry is price corn will go into feeders that will be placed later this year, a question that ripples across the entire livestock marketing chain. Good weather across much of the US corn belt last week caused corn futures to drift lower and there was plenty of anecdotal evidence that farmers were able to make considerable progress in planting the new corn crop. On Monday night, USDA released its latest report on the corn progress, showing that through week 20 of the year (May 18), US corn producers had planted 73% of the overall corn crop, slightly lower than the trade estimate of 75%. In the last two weeks, corn producers have planted about 46% of the entire corn crop, impressive progress considering lingering showers and some persistent wet patches. Moreover, it appears that with some additional good weather, producers could be fairly close to 90% by the end of this week.



E-Livestock Volume 19-May 16-May 12-May
LE (E-Live Cattle): 15,309 8,939 13,620
GF (E-Feeder Cattle): 231 352 210
HE (E-Lean Hogs): 7,137 12,638 19,800

If the rapid progress in corn plantings the last two weeks allowed livestock producers to breathe a sigh of relief, the enthusiasm likely will be short lived as plenty of hurdles remain this summer. In the last 10 years USDA has also tracked the percent of the corn crop that has emerged. We do not claim to be agronomists but it is our understanding that a late crop emergence means that the pollination phase (the most critical for yields) will be pushed back further into the summer, exposing the fragile crop to the intense summer heat. Furthermore, late emergence also means that the crop could be exposed to frosts in the fall. For the week ending May 18, USDA reported that only 26% of the corn crop had emerged, compared to 59% a year ago and 56% for the average of years 2003-07. The comparison to last year is especially interesting given the delays in planting in 2007. Because farmers were able to catch up quickly by the middle of May, crop emergence actually was above the five year average level. This year, corn crop emergence remains well behind and it is the slowest in the last 10 years. The more comparable recent year we could find was 2002 and the current crop is behind that one also. In that year, corn yields were 129.3 bushels per acre, 6.4% lower than the previous year.


5m Editor