Corn plantings are off to another slow start but that did not seem to provide much support to corn futures on Monday as all contracts lost ground. The nearby May corn futures closed at 3.695 $/bu, 6.6 cents lower than the close on Friday. December '09 and 10 March futures contracts fell 8.9 and 9 cents, respectively.

USDA reported that for the week ending 19 April, just 5 per cent of the US corn crop in the main 18 states was planted, 3 points higher than the previous week but well behind the five year average of 14 per cent. Plantings are especially slow in Illinois, where only 1 per cent of the crop has been planted compared to 23 per cent for the five year average. Indiana has yet to start compared to 9 per cent for 2004-08 average while Iowa was at 6 per cent compared to 10 per cent for the five year average.

As last year showed, however, it is possible to overcome a very slow start to the planting season. Weather reports seem to indicate that planting conditions will improve across much of the Corn Belt this week so there is an expectation that we could see corn plantings progress at a better pace when USDA issues its next update.

Markets for the moment are focusing on more bearish news, such as renewed fears about the insolvency of major financial institutions and the potential for a prolonged economic downturn. Also negative was the sharp reversal in soybean futures, which lost over 30 cents during the Monday session. Crude oil prices fell by almost $5 per barrel and energy futures will remain a critical driver for corn prices going forward.

Livestock futures also were down sharply on Monday following the broad selloff in equities and renewed fears that the recent rally was running out of steam and that the US economy may not be ready to recover as quickly as some were hoping. While the state of the banking sector is very much in focus, less attention is being paid to the state of private (both household and commercial) balance sheets.

Collapsing asset values mean that everyone will have to tighten their belts in order to survive. It’s a great strategy for families and the little shop down the road. But when all done at the same time, it’s terrible news for economic growth. That’s part of what continues to spook markets, sucking the oxygen of many a rally. It’s also why the outlook for banks may not be as good as some are hoping.