The big story in the market for the past few weeks has been the flooding that has taken place in the Plains and Midwest. This was the result of the rapid rise in temperatures that melted the deep snowpack at the same time rains moved through the region.

The obvious concern with this from an agricultural perspective is what it means for production this coming year. It may take several more days, if not weeks, for waters to fully recede, and that is before any clean-up can take place. There is little doubt this will impact planted acres and crop development in that region.

This flooding will affect more than just grain and soybean production. The greatest concern is what the waters have done to storage facilities. Many bins were underwater for an extended period of time, and damage has likely occurred.

High water levels have also hampered commodity movement across the Corn Belt – not just for raw commodities, but for finished products as well. The most notable has been ethanol, in that plants have had to shut down as they cannot receive corn, nor can they ship out the finished fuel.

Commodity quality on a whole is becoming a market topic, mainly on corn. This is from the large number of corn piles that were built last fall, still sitting. Some of these are now starting to be opened, to find high levels of damage have taken place. This is especially in areas where winter blizzards blew snow under covers.

We are also starting to hear of bins that had snow blown in on top of them over the winter and now the grain is losing quality. When temperatures start to warm, this issue will only be compounded.

Spring weather on a whole is becoming more of a market topic. While recent heavy rains and floods have been an issue, many fields in the United States will go into spring with a full reserve of soil moisture.

These wet soils are causing a concern for timely planting right now, but this mindset can change quickly. It is also possible we could see a shift in weather and still see a timely planting season this year.

The greatest concern in planting right now is on corn. The USDA is projecting nearly 3 million more corn acres this year than last. Even if we had normal planting conditions this seems like a stretch, especially with the market economically favoring soybean production.

Early reports from the southern United States indicate nearly 1 million more soybean acres from that region alone. History shows us that from a weather aspect alone, though, corn seeding will have to be delayed into late May before any acreage shifting of a significant volume takes place.

Trade talks, or the lack thereof, between the U.S. and China continue to impact the commodity markets. While China has made some purchases of U.S. commodities, the volume was much less than what was publicized when the latest round of talks ended.

The latest on this situation is that talks will not resume until this summer. By then, the U.S. may have missed out on much of China’s yearly import needs. The White House has stated even if a trade resolution is reached, the Chinese tariffs will remain in place, which is causing doubt over the entire situation.

The U.S. also held talks with Brazil on trade. These were more productive, with Brazil agreeing to buy U.S. pork and wheat. While this is good news, the U.S. will likely resume beef imports from Brazil, which is concerning for that industry. Brazilian beef processing facilities must first pass a U.S. audit to ensure quality.

A concern being felt across the commodity market is the low volume of exports this marketing year. If the U.S. holds to its current paces, yearly sales will all fall short of current estimates. At this time these shortfalls would be 460 million bushels on corn, 300 million for soybeans, and 305 million for wheat.

While these numbers will be trimmed between now and the end of the year, to completely erase them will be quite difficult.

The commodity that may see the greatest build in demand is wheat. The spread between corn and wheat has narrowed considerably in recent weeks, coming in to as little as 70 cents at times. This has sparked wheat demand in the global market, mainly for feed.

The most notable is South Korea, which has steadily booked feed wheat recently. The U.S. has also seen sales to Brazil and Mexico in recent weeks. While this is supportive for wheat, unfortunately, it is also displacing corn demand.

Karl Setzer is Director of Risk Management for Citizens Elevator in Charlotte, Mich. His market commentary can be found on Twitter by @ksetzergrains and online at www.citizenselevator.com

The opinions and views in this commentary are solely those of Karl Setzer. Data used for this commentary obtained from various sources are believed to be accurate.