This is Palmetto Grain’s market report featuring Brooks Schaffer. You can get in touch with him at 843-540-4540 or brooks@palmettograin.com.
Due to a slowdown in fund purchases, the corn market fell slightly this past week. We project that they have recouped the majority of their short position in beans and corn. As we follow the planting process, expect the market to move sideways now that spec money is almost at net neutral. For much of the corn belt, there will be an opportunity to plant during the following few days before the next round of showers arrives on Sunday.
Brooks Schaffer
When the USDA releases its planting progress report at 4 p.m. on Monday, we will be able to determine whether planting is lagging behind the norm.
This week’s ethanol data revealed that the crop’s output had recovered and exceeded forecasts. On flat demand, we did witness an increase in ethanol stocks, though. This week, we also announced a sizable corn flash sale to Mexico, although the export data fell short of our expectations. Before falling and finishing the day lower, new crop December corn reached a new recent high of $4.9675. Technically speaking, this is a significant reversal that might trigger some selling, but if planting is further delayed, the market might push back through that level since fundamentals always prevail over technicals.
This week’s volatility in soybean prices was largely caused by ongoing flooding in Schaffer Southern Brazil, which destroyed the harvest that was left in the field and jeopardized certain storage facilities. during 25 inches of rain have fallen in some places since April, and during the next ten days, many more are expected. To properly evaluate the damage, some time will pass. There were reports early in the week that the Biden administration would impose tariffs on Chinese-sourced vegetable oil. Because vegetable oil competes with bean oil, bean oil rose and took soybeans with it. Bean oil dropped and took beans with it when the tariffs were revealed to only apply to electric cars and auto parts.
NOPA crush came out this week as well showing April crush below expectations and broke a streak of record monthly crush numbers going all the way back to the first month of the marketing year (September). Soybean oil stocks were below expectations which took a little of the sting out. Crush is still at a pace to be at USDA’s estimate or above but many were expecting USDA to have to dramatically raise their domestic crush estimate and that may not have to happen if this trend remains.
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Wheat also posted a technical key reversal on Wednesday after making new highs midday and then closing lower. But fundamentals easily trump technicals when it comes to production issues. Headlines from Russia continue to dominate the market but they are about weather not the war. Parts of the key production regions have seen 20 to 40% of normal rainfall in the last three months. Then they were hit by two cold snaps that brought two consecutive late frost events. A Russian agency reported that over a million acres of wheat will need to be replanted.
As long as the headlines continue, wheat should stay supported but if the market feels the damage has been priced in wheat can give up the gains quickly.
.. Russia’s headlines still rule the Schaffer market, but they are more concerned with the weather than the conflict. During the past three months, rainfall in some of the major production zones has ranged from 20 to 40 percent of average. Then two cold snaps arrived, bringing with them two late frost incidents in a row.
It will be necessary to replace more than a million acres of wheat, according to a Russian agency. Wheat should continue to be supported as long as the headlines are there, but it might rapidly lose its gains if the market believes the damage has been factored in.