This is the Market Report with Brooks Schaffer of Palmetto Grain. Reach him at [email protected] or 843-540-4540.
Markets continue to trade a fairly narrow range despite the turmoil in the outside markets and elsewhere in the world. We will get USDA’s latest update on supply and demand this Thursday at 12 noon. On Friday’s report I will be able to give you some information from the report which will most likely set the direction of the market for the next few weeks. There are some weather systems forecast to make their way across the country bringing moisture in the next few weeks but harvest should continue at a rapid pace. Government offices were closed on Monday for the Columbus Day holiday so we will not get harvest progress until today (Tuesday) at 4pm. We should be over halfway harvested very quickly and be over the hump as far as harvest pressure. Farmers have been very reluctant sellers with prices well below last years harvest period when December corn was around $6.75 and Nov beans were $13.75. Lack of producer selling will help the market find buying after harvest as users have to bid bushels out of the bin.
USDA’s October report this week will be the first USDA report that includes objective yield estimates using actual measured yield results. In years when the growing season ends prematurely, negatively affecting kernel and pod fill, satellite and survey data have not done a good job at pegging the yield. We have to have the actual harvest data to discover the damage. This report will begin that process. Average analyst estimate for corn yield is 173.5, which is 3 tenths of a bushel less than USDA’s Sept estimate of 173.8 (173.4 final yield last year). The average estimate for bean yield is 49.9 which is 2 tenths of a bushel less than the Sept estimate of 50.1. For corn, that is not a meaningful drop in production but continues a trend of lowering yield on each report. For beans, that much of a yield loss would have meant more before USDA raised stocks and old crop carry in on the stocks report. If this is the number USDA uses, it is still fairly comfortable for corn and very tight for beans. This kind of carryout should keep corn supported at current levels and will support a post harvest bounce above $5. Beans may need some rationing so the trading range will be wider and we should see a move back to the mid to upper $13’s. Of course, if the number is different from expectations, the market is going to have to readjust to what the number is. Stay tuned Thursday at 12 noon when there could be some excitement in the markets.
The outbreak of war between Israel and Hamas has had reverberations throughout the world but so far it has had a limited impact on the grain markets. Crude oil and energy prices have moved higher pricing in more premium and that is bullish for corn and beans longer term but does not really change much in the near term. If more countries are drawn in to the conflict that could change the fundamentals as grain flows have to be adjusted but I do not see a predictable path of that yet. Ukraine was quick to show their support and solidarity to Israel who has been slow to condemn Russia. Russia continues to make threats and attack grain infrastructure leading western nations to pledge more advanced air defense systems. Russia also continues to export wheat out as fast as they can, some of their own production and some stolen from Ukraine. The Black Sea region remains a tinderbox in the grain market which could explode at any moment if the right spark hits.