Brooks Schaffer Market Report for Tuesday September 19

This is the Market Report with Brooks Schaffer of Palmetto Grain. Reach him at [email protected] or 843-540-4540.

Corn and soybeans have come under harvest pressure as harvest ramps up in the Midwest due to the premature end to the growing season. Early yield reports have been all over the board and overall inconclusive. USDA pegged harvest progress at 9%, compared to 5% last week and five year average of 7%. This was the first week they reported soybean harvest progress and it came in at 5% compared to five year average of 4%. 

I expect yields to continue to trend lower on future crop reports. However, for corn these lower yields are just going to take some of the cushion away from the balance sheet, not threaten to make us run out of corn. For beans, any loss in yield means we are going to have to ration more demand to keep from running out. Therefore i think the harvest pressure will be over soon. Corn held the old low on report day but was unable to hold it on monday printing a new low on dec corn of 469. That may open up another leg lower as funds continue to add to their bearish bets at the same time of the harvest pressure. Beans are still trading in the same range we have been in for the last few months. 

Brazilian farmers can now legally begin planting, but will wait on the monsoon rains to begin before putting seed in the ground. Off the coast of Brazil, the atmospheric flow is not going far enough north due to a high pressure ridge to catch the moisture filled air from the topics and begin the monsoon rains. Monsoonal rains is what brings the moisture for most of the central and northern part of the Brazilian growing season. We are not at the stage where the lack of monsoon rains will negatively affect production, but we are at the point where we know this will not be an early planted crop. The earlier they plant, the earlier they can harvest and get beans into the export market to compete with us. It also allows more acreage of second crop corn. Every week they are delayed makes the second crop corn smaller. As tight as the US balance sheet is on beans, the market will be closely watching the South American weather. The long term weather models indicate a dryer than average growing season, but in a normal year, they get many times the amount of moisture they actually need so it needs to be much much less than normal to negatively affect production. 

Wheat is under pressure as we got news today of several ships headed toward Odessa to load wheat. Despite Russia pulling out of the grain deal and making all the threats they can come up with, Ukraine is able to move grain out. This may have added some selling pressure to corn as well today as there were rumors there may be some corn being exported from Odessa as well. As we have seen for the entirety of this conflict, the calm can be misleading as all it takes is a few shots to escalate the situation. 

The influence of the outside markets has been waning in the grains, or the effects have just been offset. The dollar has been much stronger which is a negative influence but energy prices have been rallying as well which is positive to the grains.