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MARKETS Ohio’s Country Journal


DOUG TENNEY LEIST MERCANTILE


Managing the Market


This column is believed to be reliable and


includes the author’s opinions. Unforeseen and changing circumstances can change price out- looks and direction. Neither Ohio’s Country Journal or Tenney assume liability for their use. Doug Tenney is a licensed commodity broker. Copyright 2012, Doug Tenney, all rights reserved. E-mail address is dtenney@leistmercan- tile.com. Leist Mercantile specializes in marketing strategies and crop insurance coverage. Contact them at 1-800-231-6660. “It’s a big world out there, Doug.


Look around.” A few minutes earlier I had fixed


Sunday morning breakfast. I had toasted some bagels and thought I was helping out. But I had grabbed the plain bagels, not the raisin ones Cindy was expecting. I had told Cindy that I just did not see them. That is when she imparted her words of wisdom. Producers know it is a big world as well, but in coming weeks they will be very focused on planting corn and soybeans as timely as possible. Last month’s USDA planting inten- tions and grain stocks report is behind


us. However, its surprises will be talked about for months. Numerous repercussions reverberate


when looking at all of the numbers. It is most interesting to note that the corn numbers were both bullish and bearish on the same report day. First, it was bull- ish as March 1 grain stocks were 6.15 bil- lion bushels, 143 million bushels below the average trade estimate. As various trade estimates came about in the days preceding March 30, the high and low estimates for stocks were a whopping 363 million bushels apart. That huge range strongly suggested that there would be huge potential for a surprise. Guess what! There was indeed a surprise with corn stocks lower than expected. Old corn that day closed up the 40-cent limit. It marked the seventh out of the last eight quarterly stocks reports with corn having a limit move. This string dates back to June 2010


when corn was down the then 30-cent limit. U.S. corn acres were estimated at 95.9 million acres with soybean acres at 73.9 million acres. Corn acres were above the high end of trader expectations while the soybean number was below the low end of expectations. The corn number marked the highest


U.S. acres since 1937. Some are already suggesting corn acres will move lower in upcoming months with the soybean acres inching higher. Corn planting has


Ohio intends to increase corn acres Based on a March 1 prospective


plantings survey, Ohio farmers intend to increase the amount of corn and oat acreage in 2012 while decreasing the wheat and hay acreage. Soybean and tobacco acreage remains the same as last year. Ohio corn producers intend to plant


3.80 million acres this spring, up from 3.40 million acres last year. Ohio soybean acreage is forecasted at 4.55 million acres for 2012, the same as last year.


been underway in Illinois since mid- March with corn coming up in a short period of time due to earlier than normal ideal planting conditions. Last month, producers in Ohio were anxious to take advantage of much higher than normal temperatures. But little corn was planted last month in Ohio. The last thing pro- ducers want is a repeat of 2011 when most planting was delayed across the state until early June. Ending stocks of old crop corn last


month were estimated to be 801 mil- lion bushels. Some are already suggesting that the


smaller than expected March 1 stocks suggests that 200 to 300 million bushels of corn will need to be rationed in com- ing months. Perhaps that rationing threat was part of the reason China was an active buyer of U.S. corn last month. In the last week of March, they were esti- mated to have bought at least twelve car- goes of corn. Further rumors were that they bought corn in the hours preceding last month’s barrage of numbers with the March 30 reports. South American soybean production


continues to be reduced with the heat and dry weather from January. It is indeed a big deal as China continues to be a buyer of U.S. soybeans. They may not be thrilled about the higher prices they are paying for soybeans compared to prices seen two months ago. But, with


projections for ending stocks for old soy- beans expected to fall back below 200 million bushels from the current 275 mil- lion bushels, China is anxious to replen- ish their stocks. Chinese buying spurts are likely to continue as some analysts are already suggesting new crop ending stocks in August 2013 could be near zero. We all recognize zero is not reality.


However it does reinforce the notion that stocks for the 2012 crop year will need to see rationing take place either on the demand side or additional soybean acres planted in the United States this spring to alleviate the pending tight supply. It is why some are suggesting soybean prices have additional upside potential. In coming weeks, look for old corn to


be in a range of $6.00 to $6.80. With the bullish corn report of last month, don’t be surprised to see a lot of folks holding out for old corn prices of $7.00 or above. New crop December CME corn will have great difficulty trading above $5.90 with- out some kind of weather problem in coming months. November CME soy- beans could reach $14.25 or higher to help ensure more additional acres are planted. In addition, don’t be surprised if additional soybean acres are also planted this fall in Brazil and Argentina.


Thought for the day “I’d rather attempt to do something


great and fail than to attempt to do noth- ing and succeed.” — Robert Schuller


Winter wheat acreage for 2012 is


estimated at 580,000 acres, down 300,000 acres from the previous year. The state’s oat acreage increased 5,000 acres from last year to 55,000 acres. Ohio hay producers expect to har-


vest a total of 1.05 million acres, down 6% from the previous year. This includes alfalfa, grain, and all other types of hay. Burley tobacco acreage is forecasted at 1,600 acres in 2012, the same as 2011.


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Ohio’s Country Journal • ocj.com • Mid-April 2012 11 U.S. corn growers intend to plant 95.9


million acres of corn for all purposes in 2012, up 4% from last year and 9% high- er than in 2010. If realized, this will rep- resent the highest planted acreage in the United States since 1937 when an esti- mated 97.2 million acres were planted. U.S. soybean planted area for 2012 is


estimated at 73.9 million acres, down 1% from last year and down 5% from 2010. Compared with 2011, planted area is down or unchanged across the Corn Belt


and Great Plains with the exceptions of Illinois, North Dakota, South Dakota, and Wisconsin. U.S. wheat planted area is estimated


at 55.9 million acres, up 3% from 2011. The 2012 winter wheat planted area, at 41.7 million acres, is up 3% from last year but down 1% from the previous estimate. Of this total, about 29.9 million acres are Hard Red Winter, 8.4 million acres are Soft Red Winter, and 3.5 mil- lion acres are White Winter.


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