The 2019 US planting season has been one for the history books, with corn planting at the slowest pace on record due to the excessive wet weather pattern across the US. It began with an abrupt change to a wetter pattern immediately after the 2018 harvest. This did not allow fall application of anhydrous ammonia ahead of the 2019 corn crop before winter set in, which is highly unusual. The wet pattern persisted during the winter months and extended through May. The above chart shows precipitation as a percent of normal over the past six months. with many areas receiving 130-250% of normal precipitation from December to early June.
As a result of the heavy rains over the central US, all five of the US Great Lakes are near or above record high water levels as of early June, and the Illinois and mid and upper Mississippi River are effectively closed for the remainder of June due to high water, which is also very unusual. The following chart shows the record slow US corn planting pace and the second slowest US soybean planting pace.
The acreage and yield results for the U.S. 2019 corn crop are big unknowns right now. Trade estimates suggest acreage will fall by 4-10 million from the Prospective Planting Report number of 92.8 million. Additionally, the very late nature of corn planting comes with a yield drag and USDA, surprisingly for this time in the growing season, reduced projected 2019 yield to 166.0 bushels per acre. This is down from the USDA’s initial 2019 trend yield estimate of 176.0. These factors combine to significantly tighten the U.S. supply and demand situation with much of the growing season ahead.
The QuikVol Tool from QuikStrike lets you chart and analyze historical volatility data for more than 40 CME Group products, offering views into implied and actual volatility, skew, constant maturity, and implied volatility cones.
Vietnam is the world’s second biggest soymeal importer (after the EU-27 bloc); the three largest soymeal exporters are Argentina, Brazil and the U.S. The Sino-U.S. trade tariff disagreements that started in April 2018 have had an impact on the global soybean and soymeal trade resulting in the possibility for additional price volatility. Firms involved in importing soymeal into Vietnam may want to consider an active hedge program to guard against unforeseen price volatility.
The volatile price movement of crude palm oil (CPO) during 2018 provides a good learning opportunity about the key features of using futures contracts to protect a producer’s physical exports against adverse price movements.
Open Interest (OI)