Brooks Schaffer Market Report for Tuesday November 21

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

The Thanksgiving week usually brings some lighter than normal volumes which can sometimes mean more volatility. If something major happens to move the market, big orders can move the market more than they would if we had normal trading volume. The market will be trading normal hours through the close on Wednesday at 2:20 pm. There will be no overnight session Wednesday night and the market will open back at 9:30 am Friday morning and close early at 1:00 pm. Then normal trade Sunday night 8:00 pm open. 

Thinner volumes from the holiday trade and the weather market could make for some real fireworks this week. Market ended last week on a very weak note after rains were forecast to move into the driest areas of Brazil over the weekend and through this week. Some meteorologists were pointing to signs that this shift was a change in the pattern and signaled the arrival of the monsoonal rains in earnest. The market was quick to take some of the weather premium out of the market on the news. The rains that actually fell ended up being very spotty, with the more widespread rains pushed out until Monday. The amounts expected to come later in the week have been trimmed on further model runs but a bigger issue is that the extreme temperatures are coming back later in the week and the long term runs are trending back warm and dry for December. The soybean market was quick to add back some weather premium to the market. 

One thing that may have held the market back a bit were the election results over the weekend in Argentina. The polls going into the weekend showed both candidates neck and neck but political outsider Javier Milei handily beat the establishment’s candidate, Economy Minister Sergio Massa. The lopsided vote of 56 to 44% shows “the depth of despair in a country suffering 140% inflation and 40% of the population living below the official poverty level.” This result is important for the grain markets because Milei’s campaign promises were to end the central bank and swap the peso for the US dollar as the national currency. If this happens, it would end the massive export taxes on Argentine grain and lead to much less farmer hoarding of soybeans since that is their only hedge against the runaway inflation. He has his work cut out for him as there is a very entrenched establishment that will not go away quietly. Changes happen slowly but the market will try to price it in quickly. 

Harvest is in the short rows in the US now with corn harvest estimated at 93% today compared to 88% last week, 96% last year and the five year average of 91% this week. Soybean harvest was not reported but is all but done in most of the country. 

Markets will continue to trade the shifting weather models so do not be surprised to see some additional volatility this week. First notice day is coming up on the December contracts but it happens next Thursday, not during the holiday week this year.