Market Matters Blog           05/23 06:36
Dramatic Drop in Soybean Basis
The Bernanke Bump and Tumble
Customer Protections, Trading Issues Take the Stage
Soybean Basis Strong; Barge Freight Weak
Chinese Farmers Struggle to Plant Corn
April Floods Still Affect Barge Traffic on Illinois River
The Super Cycle and the Fall of Commodity Hedge Funds
Soybean Basis Rises As Most River Levels Begin To Fall
How Did 1984 Turn Out?
Columbia Grain Locks Out Longshoremen

******************************************************************************
Dramatic Drop in Soybean Basis

   Soybeans

   Soybean basis saw a dramatic drop since last week as a higher cash price of 
over $15.00 in most of the Midwest enticed farmers to sell old-crop supplies. 
National average soybean basis of 26 cents over the July futures is 22 cents 
lower than last week, but 54 cents higher than the DTN five-year average basis 
at this time. Many processors are still posting cash prices in the mid-$15.00 
range, even after the steep drop in basis levels. Lower basis levels were seen 
along the river heading to the Gulf as most terminals have caught up on late 
loadings and export demand for soybeans has been flat at this time. The USDA 
Grain Transportation Report last Thursday stated Mississippi Gulf soybean 
inspections for the week ending May 9 were down 44% from the previous week and 
were the lowest since January 1, 2010. U.S soybean plantings are 24% complete 
vs. 6% last week and vs. 71% at this time last year and the fiver-year average 
of 42%. Heavy rains moved through the upper Midwest stalling planting progress 
in North Dakota, Minnesota and Wisconsin.  

   Corn

   National average corn basis this week of 33 cents over the July futures is 
up 1 1/2 cent from last week and is 21 cents higher than the five-year average 
of the strongest basis level at this time as old-crop supplies remain tight. 
Corn basis remains firm as end users are unable to secure nearby cash corn 
while farmers continue planting. USDA reported as of May 19, corn planting was 
71% complete vs. 18% last week. While progress in Minnesota rose from 18% 
planted last week to 70% this week, farmers in southeastern Minnesota received 
up to 6 inches of rain since Friday, with some farmers reporting they will not 
get into their fields for at least two weeks to start planting. Ethanol plants 
continue to post steady to higher basis levels as margins remain positive and 
ethanol demand is expected to pick up during the summer months. Last Wednesday, 
EIA reported that while ethanol production for the week ending May 10 was up 
1.7% vs. the prior week, ethanol stocks dropped to a 2 1/2 year low.     

   Hard Red Winter Wheat

   National average HRW basis for this week at 23 cents under the July futures 
is unchanged from last week and is 16 cents higher than the five-year average 
of the strongest basis at this time. Mill demand has firmed as buyers are 
seeing little wheat come to market and look for offers to cover nearby needs. 
Buyers remain concerned that new-crop wheat may be of poor quality and too high 
in protein in the drought stressed areas. USDA's Monday crop progress report 
showed a slight decline in HRW conditions from last week with Texas showing 76% 
of the crop in poor to very poor shape and Oklahoma conditions are 52% poor to 
very poor. While central Texas has started to harvest and has reported good 
quality new crop, farmers in north Texas are cutting freeze damaged wheat for 
hay. Severe weather has continued to move through northern Texas and Oklahoma 
with high winds and hail causing further damage to the crop. Heading of the 
U.S. HRW wheat crop was at 43% vs. 29% last week and vs. 80% last year at this 
time with Kansas behind at 41% headed vs. 100% headed at this time last year.  

******************************************************************************
The Bernanke Bump and Tumble

   What goes up, does indeed come down. 

   The stock market pushed to new highs this morning as Federal Reserve 
Chairman Ben Bernanke told Congress that a premature tightening of monetary 
policy would carry substantial risk of slowing the economic recovery, and it 
would likely be several months before the Fed considered dialing back its bond 
buying program. 

   The stock market tumbled when the minutes from the Federal Open Markets 
Committee meeting in May showed dissention among the committee members of when 
to start pulling back its bond buying program, with some thinking it could be 
possible as soon as the FOMC's June meeting. 

   From surging up 155 points around 10 a.m. to closing 80 points lower, the 
Dow Jones Industrial Average had quite a busy day. The 10-year treasury notes 
are trading lower, too. The bearish part of the minutes: "A number of 
participants expressed willingness to adjust the flow of (asset) purchases 
downward as early as the June meeting if the economic information received by 
that time showed evidence of sufficiently strong and sustained growth; however, 
views differed about what evidence would be necessary and the likelihood of 
that outcome." 

   The Fed has been buying $85 billion of bonds each month, and what traders 
really want to know is the Fed's exit strategy. The FOMC committee members 
appear to disagree about which indicators they should rely on. Bernanke's 
comments that it may be a few months before trims its bond buying makes sense 
in that context: what could they decide next month if they can't agree on what 
indicators should and shouldn't count? He's buying time to figure that part 
out. 

   Traders also want to what the Fed's exit strategy. From Bernanke's 
testimony, tapering off isn't a good way to describe it. Once FOMC members 
decide the economy is on stronger footing, they'll keep buying bonds, just not 
as many. And if the economy gets worse, they might ratchet purchases back up. 

   The Wall Street Journal's Real Time Economics blog said it best: The Fed 
effectively wants the markets to experience the same uncertainty it experiences 
about policy and the economy when officials walk into a meeting, and it wants 
to condition the market to avoid jumping to conclusions about what it will do 
next. As officials keep saying, it will depend on the economy."

   What does that for farmers and farmland owners? The key is interest rates. 
Before the Fed will increase interest rates, the economy needs to be on a 
stronger footing. Unemployment must improve: 6.5% unemployment appears to be 
the magical number. The bond buying program has played a huge role in boosting 
the stock market, but that hasn't translated to a large increase in hiring just 
yet. Until it does, expect interest rates to stay near zero. 

   WSJ's Real Time Economics blog: 
http://blogs.wsj.com/economics/2013/05/22/fed-winddown-strategy-will-test-econom
ys-reaction-and-adjust/ 

******************************************************************************
Customer Protections, Trading Issues Take the Stage

   It's been more than a year and a half since MF Global's collapse froze the 
funds of more than 30,000 customers. Most commodities customers have received 
nearly 90% of what was in their accounts, but the structural flaws MF Global 
and later Peregrine Financial Group exposed are just now being taken up by 
Congress. (And you thought the claims process was slow!)

   It's time for the reauthorization of the Commodity Exchange Act, and the 
House Agriculture Committee holds its first hearing on the matter Tuesday. The 
chairmen of CME Group and IntercontinentalExchange Inc. will testify, as will 
the leaders of the primary self-regulatory organizations and INTL FCStone Chief 
Financial Officer William Dunaway. 

   While enhancing customer protections and other post-MFG concerns will play a 
large role in the discussion around reauthorizing the CFTC, expect 
high-frequency trading to play a large role in the conversation. When a fake 
tweet can cause the markets to crash and bounce back in a matter of minutes, 
the role of high speed traders -- and whether or not they actually take on risk 
-- needs a closer look. 

   A functional futures market is a crucial part of protecting the financial 
stability of farms and grain companies in an increasingly global and volatile 
marketplace. I'll be watching these hearings with interest over the next few 
weeks and months. Below is a press release from the National Grain and Feed 
Association outlining what they'd like Congress to consider in reauthorizing 
the Commodity Exchange Act. 

   ***

   WASHINGTON -- The National Grain and Feed Association (NGFA) is urging 
Congress to enhance protection for futures market customers when considering 
legislation this year to reauthorize the Commodity Futures Trading Commission 
later CFTC). 

   In a statement submitted this month to the Senate Agriculture Committee at 
the request of Committee Chairwoman Debbie Stabenow, D-Mich., and ranking 
Republican Thad Cochran, R-Miss., the NGFA focused on several potential 
improvements important to the grain, feed, processing and export industry.  
Meanwhile, the House Agriculture Committee is scheduled to begin hearings this 
week on CFTC reauthorization.

   With the collapse of MF Global nearly two years ago, the NGFA noted that 
former futures customers in the aggregate still have not received 11 percent of 
their supposedly safe segregated funds that were held by the futures commission 
merchant (FCM). "Consequently, we believe that a primary focus of the (CFTC) 
reauthorization process must continue to be enhancing customer protections with 
the twin goals of preventing similar occurrences in the future and providing 
protection to customers in the event of another FCM insolvency," wrote the NGFA 
in its statement to the Senate Agriculture Committee.

   To accomplish this, the NGFA recommended a series of reforms to the U.S. 
Bankruptcy Code, including: 

   -- clarifying that customers come first when prioritizing claims and 
distributing funds when a FCM fails;

   -- strengthening and clarifying the CFTC's authority to administer FCM 
insolvencies, including the ability to appoint its own trustee to represent 
exclusively the interests of futures commodity customers; 

   -- removing existing so-called "safe harbor" protections for any 
transactions involving the misappropriation of a FCM's customer property, 
regardless of the intent behind the transfer (the current bankruptcy code 
denies such protection only when it can be proven that the FCM intended to 
defraud customers or creditors); 

   -- harmonizing CFTC rules and the bankruptcy code concerning the liquidation 
process for a commodity futures broker; and 

   -- authorizing the formation of customer committees specifically to 
represent futures market customer interests.  

   The NGFA said other potential customer protection enhancements could include 
creating insurance coverage in the event of FCM insolvencies.  It said it was 
awaiting results of a comprehensive Futures Industry Association analysis of 
such potential products and their costs, as well as the outcome of an online 
survey of commodity futures customers' interest and input on such products.  

   "It is important to note that the solution on insurance to protect customers 
is not necessarily a government or legislated solution," the NGFA said. "It may 
be that some form of privately provided product is more cost-effective and 
appropriate."

   In addition, the NGFA recommended establishment of a pilot program to test 
the concept of introducing an optional, fully segregated FCM account structure 
for futures market customers. "Creation of a fully segregated account structure 
necessarily would result in some additional costs that likely would be borne by 
customers utilizing such accounts," the NGFA said. "...[A] pilot program 
involving a limited number of commodity futures customers, FCMs, lenders and 
regulators would be useful for testing the mechanics and identifying the 
viability and true costs of a full-segregation structure."

   The NGFA letter also expressed increasing industry concerns about the 
impacts of high-frequency trading on agricultural futures markets.  With the 
caveat that administrative action by the CFTC could prove to be a more 
appropriate way to oversee high-frequency trading activities, the NGFA 
suggested Congress should review whether:

   -- high-frequency traders should be required to register with the CFTC; 

   -- some form of margining should be required, even if no positions are held 
by high-frequency traders at day's end; and 

   -- other measures would help ensure high-frequency trading does not disrupt 
the hedging utility of futures markets.

******************************************************************************
Soybean Basis Strong; Barge Freight Weak

   National average soybean basis of 51 cents over the July futures is 1 cent 
higher than last week and continues to move well above the five-year average of 
the strongest basis at this time. Soybean basis has continued to rise and is 82 
cents higher than the DTN five-year average basis for the third week of May. 
Most U.S. basis levels have been positive since April and continue to climb as 
tight old-crop supplies remain a concern for crushers. Basis along the river 
was stronger last week with April barge placements completed and end users 
needing to buy spot supplies after flooding kept them from unloading grain onto 
barges. 

   While flood waters have receded in most main river corridors, barge traffic 
along the Illinois River remains slow due to speed and wake restrictions after 
weekend rain kept water levels high. While the Marseilles Lock and Dam reopened 
on the northern Illinois River May 14, restrictions remain in place as repairs 
continue on the gates and sunken barges are being removed. There is also high 
water in the lower corridor of the Mississippi River with a crest predicted for 
the New Orleans area by May 21. USDA reported that the Coast Guard issued 
restrictions to barge traffic on the lower Mississippi River, including slower 
speeds, no wake zones and areas near bridges were faced with nighttime 
restrictions as well. 

   Barge freight has also been lower with river conditions still hampering 
barge traffic along with slow demand in the Gulf. Barge freight in the upper 
Mississippi was down 17% from this time last year and in the middle Mississippi 
freight was down 21% from this time last year. The Illinois River barge freight 
for the week ending May 14 was down 3% from the prior week, down 19% from this 
time last year and 26% lower than the three-year average. USDA reported that 
soybean inspections for the week ending May 11 were down 44% from the previous 
week and were the lowest inspections reported since January 1, 2010. Barge 
grain movements during that week totaled 314,948 tons, which was 32% lower than 
the previous week and 41% lower than the same period last year. The total of 
grain barges moving down river was 30% lower than the previous week and the 
number of barges unloading in New Orleans was down 13.7% from the prior week. 

******************************************************************************
Chinese Farmers Struggle to Plant Corn

   Don't dismay: Cold and wet weather has delayed China's corn planting, too. 
It could prompt some farmers in China's largest corn growing region to switch 
to soybeans, but many of those changes could be offset by increased acreage 
elsewhere. China's reliance on imported soybeans will continue, as production 
there is expected to fall 3.9% this year.

   The China National Grain and Oils Information Center (CNGOIC) expects 
growers in China to raise 214 million metric tons, or 8.425 billion bushels, of 
corn this year. That's about 2.8% more than last year, Dow Jones Newswires 
reports. 

   China's soybean acreage will continue to fall, according to the CNGOIC, but 
the wet weather delays and a soybean price advantage could encourage some 
farmers to switch, a recent post by the U.S. Grains Council argued. 

   The government think tank expects farmers to produce 12.3 mmt of soybeans, 
or roughly 452 million bushels, this year. That's nearly a 4% decline from last 
year and only slightly more than Iowa's total soybean production last year. 
Iowa produced 413 mb of soybeans in 2012-13. 

   Cold and wet weather in China's largest corn growing province, Heilongjiang 
in China's northeast, has delayed planting. Some farmers are considering 
switching to shorter-season varieties, which could lower yield, or switching to 
soybeans. The U.S. Grains Council update said corn acreage is expected to 
expand in Inner Mongolia and several other provinces in North China, offsetting 
the losses in the northeast. 

   "Peanut area expanded last year and this reduced corn sown area expansion on 
the North China Plain. However, peanut prices are currently 20 percent below 
last year, which could provide more opportunity for corn area to expand in that 
region this year," said Dr. Bryan Lohmar, U.S. Grains Council's director in 
China.

   Soybean prices are 10% to 15% higher than last year in China. Couple that 
with lower yielding, short-season corn varieties and it's a compelling case for 
farmers to switch.  

   Taking into account the delays and potential crop remix, China will still 
need to import a substantial amount of soybeans. The avian flu outbreak has 
cast some doubt on how much China will buy this year compared to previous 
years, but the U.S. Soybean Export Council argues there's reason for optimism. 

   It's already China's slow season for meat consumption, according to Xiaoping 
Zhang, the export council's China director. "I personally think that the demand 
for soybean meal will begin catching up starting in July and August in order to 
supply meat for the National Day holidays in October," he said in a recent new 
brief from the organization. 

   While poultry demand in eastern China dropped 70% to 80% on avian flu 
scares, pork demand is thriving. China eats half of the pork produced globally, 
and China's soybean imports could keep pace with last year as domestic 
producers take advantage of the chicken scare to sell more pork.  

   For more, please read the U.S. Grains Council update here: 
http://bit.ly/15PSP2O

   For more on soybean demand related to the avian flu, here's the U.S. Soybean 
Export Council's news brief: http://bit.ly/10wfIjk 

******************************************************************************
April Floods Still Affect Barge Traffic on Illinois River

   Two-hundred-ninety-one grain barges moved downriver during the week ended 
May 4, according to the USDA Grain Transportation Report issued Thursday, May 
9. That compares to 76 during the week ended April 27. There was an increase of 
268 empty barges transiting through Mississippi River Lock 27, Arkansas River 
Lock and Dam 1, and Ohio River Lock and Dam 52 for the week ending May 4 vs. 
the week ending April 27.

   Prior to the first week of May, heavy rain and melting snow closed 12 locks 
on the Mississippi and Illinois rivers for days after severe flooding caused 
treacherous navigation and barge accidents. As of May 9, all areas on the 
Mississippi and Illinois rivers were open, but safety zones and restrictions 
still exist at three locks on the Illinois River. The most serious damage 
remains at the Marseilles Lock and Dam after seven barges slammed into the 
gates on April 18 with a few of those barges sinking. After closing the area 
for gate repairs, the Corps of Engineers reopened the dam last Saturday to 
allow barges to move above and below the area to catch up on contractual 
obligations. On April 25, CME declared force majeure because of the inability 
for barges to load at delivery houses in a timely manner. On May 8, they lifted 
the force majeure with special provisions for some of the areas on the Illinois 
River still experiencing high water which may hamper loadings. 

   The Army Corps of Engineers again closed the Marseilles Lock and Dam on May 
10 to draw down the pool of water between Marseilles and Dresden Island to 
construct a rock dike below the dam in order to allow for repairs of the gates 
damaged by the loose barges. In a press release from the Rock Island District 
of the Army Corps of Engineers, the chief of operations there stated: "Lowering 
the water levels will reduce the volume of water flowing through the broken 
gates," he said. "This reduction will result in less erosive forces placed on 
the rock dike and facilitate safe completion of the dike." Traffic will be 
restricted in that area for at least 7 to 10 days because the drawdown will 
cause water levels to go below the 9 feet needed to move barges. The completion 
of full repairs to the gates could take months, but once the pool can return to 
safe levels, barges may be allowed to move through the area with restrictions 
as designated by the Corps of Engineers and the Coast Guard.

   Soybean and corn basis levels remained strong during the past week as river 
terminals needed delivery of both grains after having slowed or stopped 
delivery to their terminals during the period when the river was closed. Barge 
freight on all corridors of the river system has been flat with most terminals 
concentrating on placement of April empties that had been stalled at the height 
of the lock closures in April due to flooding. Barge freight on the Illinois 
River for the week ended May 7 was 18% lower than last year and down 21% from 
the three-year average with no comparison for last week as there were no quotes 
due to the closure in the upper Illinois River.

******************************************************************************
The Super Cycle and the Fall of Commodity Hedge Funds

   Last summer a hedge fund trader told me he wasn't sure there was real money 
to be made trading grain. It didn't make sense to me then -- how could a smart 
speculator not make a few pennies during the great short-supply run-up? He 
argued down days cancelled the up days and a few other things along that line, 
but I'm starting to realize the full picture is much more complicated. 

   Commodity hedge funds like his trade more than just grains -- many are more 
heavily focused on metals and fuels -- and they've been losing money for years. 
His gains were probably more than cancelled out by losses in other sectors. A 
recent article in the Financial Times cited an index compiled by brokerage firm 
Newedge that showed the average commodity hedge fund lost 0.8% in the first 
quarter of the year. 

   That's on the heels of a 3.7% loss in 2012 and a 1.4% loss in 2011. From 
2000 to 2008, gains ranged from 20% to 40% each year. 

   Investors pulled roughly $5 billion out of commodity hedge funds last year, 
at least 20% of the assets these funds held, according to the Financial Times. 
That's a substantial chunk of change that won't be used in any commodity 
market, let alone grains or livestock. And the fund managers the Financial 
Times spoke with said that liquidation is likely to continue. 

   Commodities have been in a long-term bull market, which some call a super 
cycle, fueled by surging demand for raw materials in emerging countries like 
China and typically low prices that, in the case of oil and other mined 
commodities, discouraged new investment and kept supplies reasonably tight.  

   "We are witnessing the implosion of a large chunk of the commodities hedge 
fund industry," a chief executive of one of the world's largest commodities 
trading house told the Financial Times, echoing a widely held view across the 
natural resources sector. "The sector is, on average, performing badly and 
investors are taking notice."

   Stanley Druckenmiller, a well-known hedge fund manager, told an investing 
conference in New York on Wednesday that he thinks the super cycle is over. 
China's GDP has slowed as exports declined to large but financially troubled 
buyers like the European Union. The Chinese government is trying to transition 
the economy to one driven by consumption more than investment in fixed assets 
like buildings, which require a lot of raw material. 

   Add to it that the U.S. economy is starting to see stronger growth, and it's 
generally accepted that the Federal Reserve will raise rates by late 2013 or 
early 2014. "This is supporting the U.S. dollar index and throwing water on any 
idea of long-term inflation," DTN Senior Analyst Darin Newsom said. Commodities 
are often viewed as a hedge against inflation, and with the Dow Jones 
Industrial Average and S&P 500 inking new highs with seeming regularity it's 
not surprising noncommercial positions across the commodity sector have 
declined.  

   Druckenmiller's focus when he discusses the super cycle is on industrial 
metals and fuels, and that probably plays a large role in decline of 
commodity-trading hedge funds. But what does that mean for agriculture 
commodity markets?

   China and other developing nations that fueled the commodities boom will 
still have growing populations, a steadily increasing middle class and rising 
demand for meat. That's a pillar of support for ag commodities that oil and 
copper fundamentally don't have, but it doesn't mean ag is exempt from the 
broader downturn. 

   Noncommercial investors like hedge funds play an increasingly large role in 
the direction of ag markets, as Newsom has pointed out many times over the past 
few years. If they're not buying, it's hard for a market to rally. 

   "Unless we return to a drought, the high prices posted in 2012 are probably 
THE high prices we will see" for a while, Newsom said. Profitability in grains 
will likely come down, farmland could start to look overpriced and the 
Midwestern economy could take a turn for the worse. 

   Bloomberg article on Drunkenmiller: http://bloom.bg/12gCGOa

   Financial Times on the decline of commodity hedge funds: 
http://on.ft.com/16k4TZJ

******************************************************************************
Soybean Basis Rises As Most River Levels Begin To Fall

   Weekly national average soybean basis of 47 cents over the July futures is 3 
cents higher than last week and continues to move above the five-year average 
of the strongest basis at this time. Soybean basis and cash price moved higher 
last week as tight supplies are still a concern for end users. Late last week, 
it was reported that a second soybean processing plant in the Midwest will be 
idled indefinitely due to poor margins and lack of supplies. The basis along 
the river was lower early last week as high water caused problems along the 
Illinois River and the Mississippi River in St. Louis. As the week ended, river 
basis was firm as barges were able to move to areas waiting for empties to load 
soybeans to the Gulf. Over the weekend, the Marseilles lock and dam on the 
Illinois River temporarily reopened to allow river terminals to move previously 
contracted soybeans to the Gulf, which improved basis levels in that area. The 
lock and dam at Marseilles is scheduled to close again May 10 for further 
repairs and may not reopen for 5 to 10 days, according to barge line sources. 
Due to continued high water in the Illinois River, barges are subject to 
restrictions of slow speeds and no wake. 

   Corn

   National average corn basis this week of 27 cents over the July futures is 
up 1.5 cents from last week and continues to move higher than the five-year 
average strongest basis level at this time. Corn basis has continued to stay 
strong as tight supplies and slow corn planting have kept prices firm. However, 
the cash corn price on Monday was sharply lower after futures dropped on drier 
forecasts, which may allow farmers in key areas to resume or begin planting 
corn. The basis on the interior has been strong since late last week at various 
Midwestern ethanol plants, as the drop in corn futures and a higher ethanol 
market gave margins a boost. The EIA report from last Wednesday for the week 
ending April 26 stated ethanol production was up .5% from the previous week, 
but news that supplies fell 3.2% from the prior week, the lowest level since 
early November 2012, gave a boost to the ethanol market. 

   Hard Red Winter Wheat

   National average HRW basis for this week at 24 cents under the July futures 
is up 3 cents from last week and is above the five-year average of the 
strongest basis at this time. While interior demand is steady at best and 
nearby cash movement from farmers has been slow, basis continues to remain firm 
as the market is still uncertain about the quality and quantity of the new 
crop. USDA reported on Monday that winter wheat conditions declined last week, 
with 39% of the crop poor to very poor vs. 35% the prior week as freeze and 
drought damage have occurred in parts of Kansas, Oklahoma and Texas. Wheat 
heading was reported at 20% vs. 64% at this time last year, with Missouri, 
Oklahoma, Kansas and Indiana well behind last year's pace. The HRW cash price 
was strong most of last week, but ended the day lower Friday after the market 
saw better-than-expected yield predictions from the crop tour and forecasts for 
showers to head into some of the key areas of the Plains over the weekend into 
this week.

******************************************************************************
How Did 1984 Turn Out?

   Five percent of the U.S. corn crop was planted as of April 28, according to 
Monday's USDA Crop Progress report, the slowest start to planting since 1984. 
Earlier that same day, December corn closed up 35 1/2 cents after the weather 
forecast turned cooler and wetter for the central U.S., increasing concerns 
that corn will be planted late in 2013, or in some areas, may not be planted at 
all. It is generally assumed that corn yields fall when planted after May 15. 
What happened to the corn crop of 1984? Did it survive the slow start?

   On May 9, 1984, USDA reported 5% of the corn crop had been "seeded in the 17 
major producing states, compared with ... 13% average." The report went on to 
describe a scenario that could have been written today. "Cool wet weather 
dominated much of the nation throughout the month (of April). Average 
temperatures for the month were 4 to 8 degrees colder than normal from the 
central Rockies into the lower Ohio Valley and from the central Plains to the 
southern and central Appalachians."

   Unlike this year, however, that 1984 report went on to say, "Temperatures 
were warmer than normal through the northern tier of states and into Canada." 
In 2013, the northern states and Canada have suffered a long, cold spring and 
soil temperatures are still in the 30s.

   Now jump ahead to June 11, 1984: USDA published this description of May 
fieldwork: "Widespread rainfall delayed fieldwork across the eastern half of 
the nation for most of May. Land preparation and planting fell further behind 
schedule ..." Did the corn ever get planted? Well, yes. The rest of that 
sentence read, "... planting fell further behind schedule until midmonth when a 
week of generally open weather allowed rapid progress."

   As it turned out, the corn crop that was only 5% planted on May 9, 1984, was 
90% planted on June 3, 1984, thanks to the resourcefulness of American farmers 
and that one week of "generally open weather." Corn production totaled 7.674 
billion bushels that year, 638 million bushels more than total use. Corn prices 
for the December 1984 contract dropped from $2.99 a bushel on May 9 to $2.65 
3/4 by the end of November. 

   Does this mean that all will go well in 2013 and we will grow that 
14-billion-bushel crop after all? Not necessarily. There are plenty of 
differences between the corn markets of 1984 and 2013. There are also great 
differences in the ability to plant large tracts of corn and in corn 
survivability and production. It is also worthy to note that the average start 
date of corn planting has gotten earlier over the years from 1984 to 2013. Info 
from Darrel Good at the University of Illinois said the late corn-planting date 
in 2013 is about 10 days earlier than it was in 1984.

   I explained my concerns about the rosy outlook for 2013 corn production in 
the April 11, 2013, article, "Is It Time For December Corn?" However, the 
lessons of 1984 should give us pause before we race out and buy corn at 
limit-up prices. The markets are understandably concerned about this year's 
slow start, but it is still early and those concerns could evaporate with one 
week of generally open weather. May should be an interesting month.

   Todd Hultman can be reached at todd.hultman@telventdtn.com 

******************************************************************************
Columbia Grain Locks Out Longshoremen

   Columbia Grain locked out union workers this weekend in the newest 
development in a labor dispute that's been festering since long before the 
contract expired between the grain terminals and International Longshore and 
Warehouse Union.

   The grain terminals and longshoremen have been at an impasse since the 
contract expired last September. Columbia Grain is the second terminal to lock 
out workers. United Grain in Vancouver locked out workers after accusing a 
local union leader of sabotaging equipment. Columbia Grain accused union 
members of slowing operations at the terminal. 

   "With bargaining stalled and the longshore workers engaging in 'inside game' 
tactics, including slowdowns, work-to-rule, and demands for repeated 
inspections of the same equipment -- all designed to negatively impact Columbia 
Grain's operations -- we have decided that a lockout is our best alternative," 
the company said in a written statement (according to The Oregonian, link 
below).

   Temco, a combined effort of Cargill and CHS, reached its own tentative 
contract with the union. It hasn't been approved. 

   Money isn't the issue in this labor dispute. The grain terminals want 
similar business friendly terms that the union gave to the terminals in 
Longview, Wash., and Kalama, Wash. 

   Both terminals that locked out workers implemented back-up plans, including 
hiring non-union tugboats and strikebreaking firms to provide additional 
workers to make up the shortfall. Sources say that business is carrying on, but 
the situation is tenser than ever before. 

   While the dispute hasn't materially affected grain movement out of the PNW's 
export terminals, rising tensions could take a toll. We'll just have to wait 
and see. 

   
http://www.oregonlive.com/business/index.ssf/2013/05/columbia_grain_export_termi
nal.html  

******************************************************************************