Brooks Schaffer Market Report for Friday November 17

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

Grains continue to chop but have not been able to break out of the ranges we have been trading for the last few months. Soybeans were the leader this week as all eyes are on South American weather. Temps across much of the northern growing regions have been well above 100 degrees and there is very little rain to speak of. The crops can handle the lack of rain but the oppressive heat on top is just too much. Much like we see early in the US growing season the debate now centers around how much damage has been done vs how much can be recovered if the weather turns. There will be a significant amount of replanting that has to be done but the actual amount will be widely debated. What helped propel the market higher was a noticeable uptick in Chinese purchases. This may have been from concerns about the Brazilian crop or trying to build goodwill ahead of the meeting between Chinese President Xi Jinping and President Biden that happened Wednesday in San Francisco. Soybeans were weaker toward the end of the week as forecast models are adding in some rain for the most parched areas for the weekend. Some meteorologists are pointing to a shift in the atmospheric flow and winds to indicate a break of the current pattern and the start in earnest of the monsoonal rains. This remains to be seen but the market was confident enough in the rains to take some of the weather premium out on Thursday.

This week saw some pretty encouraging data on the demand side. Ethanol production remains above the level needed to reach USDA’s estimate which helps support corn. The NOPA October crush report came out this week was very bullish for soybeans as it showed a record US soybean crush and well above expectations. And even with more crush than expected, soybean oil stocks continue to drop showing how strong demand is. Exports this week were also well above expectations for both corn and beans. We actually hit the pace we need to reach USDA’s estimate in both corn and beans for the first time this year. One week does not make a trend so we will be watching closely to see if this continues.

Outside markets were overall friendly this week too with the US dollar falling dramatically early in the week. Economic data released this week gives the market more confidence the Fed will pause rate increases for now. Crude oil was higher monday and tuesday but turned dramatically lower wednesday and thursday putting some additional pressure on corn and beans.

In the midst of a weather market, lots of other information tends to get shifted to the side and we are in a full blown weather market. Buckle up for lots of volatility especially in the soybeans. If the rain this weekend really is the first in the start of the monsoonal rains, the market is going to struggle to get back to the old highs. If the models trend back hotter and drier next week, buckle up!