Brooks Schaffer Market Report for Friday, September 29

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

Markets continue to tread water this week with nothing to push us out of the current trading ranges. Harvest continues at a rapid pace in the Midwest due to extremely dry soils. The rain that has fallen in the Midwest this week was not enough to slow down harvest much. We get USDA quarterly stocks report today at noon which has a history of being a big market mover. 

The stocks report coming out today is supposed to be an actual count of all the bushels left in the country as of Sept 1st. USDA gives a projection of old crop ending stocks on the monthly supply and demand reports. The last old crop carryout projections we got were on the September Supply and Demand report. If USDA was way off on that old crop carryout number, it should show up on this stocks report and then will have to be accounted for on the October Supply and Demand update. Any adjustments made to the old crop carryout will then be carried forward to the new crop balance sheet. The new crop balance sheet, the crop that we are currently harvesting, is what is driving the market. The market is trying to gauge yield as harvest progresses and demand for the whole year ahead. As I say many times on a Friday morning recording on the day of a report, whatever I say now may not matter after noon today. 

The market has traded in a narrow range waiting for more information about the crop. Harvest is progressing but yield reports at this early stage are still anecdotal. The market will really lean on USDA’s updated yield that we are supposed to get on Oct 12th. If we get an extended government shutdown, it would risk USDA not being able to get that report compiled and released. This would be a big deal as it would leave us flying blind for as long as the government shutdown lasts. We will be getting lots of private estimates but they do not carry the weight of USDA, like them or hate them. 

News flow has been quiet this week. There are rumors of China buying corn out of Ukraine. Ukraine continues to load vessels in their deep sea ports in the Black Sea despite Russian threats. Exports this week were decent with corn falling within expectations, wheat sales were just above expectations and soybean sales were on the lower end of expectations. Ethanol production saw a rebound this week. Higher energy prices are good news for grains overall even if the grains are not following every up and down move that crude oil makes. 

I look for corn and beans to continue to trade the same range. The range in beans is much larger than corn because there is a lot more risk in the balance sheet. I think corn can get back over $5 but i do not see potential for explosive upside with what we know now. Beans on the other hand are going to have to ration some demand, we just do not know how much yet. South American crop prospects will drive the bean market direction into the new year. Monsoon rains have not started yet to allow planting but some of the models are showing it coming in the next few weeks. However, there is not agreement between the models yet so we will have to wait and see.