Brooks Schaffer Market Report for Friday December 1

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

Corn and wheat were finally able to build some momentum on Thursday. December corn finally broke its streak of 5 lower closes in a row closing up 12 cents. Corn got a big boost from export sales that were significantly above expectations and at a marketing year high. Ethanol data was not as negative as last week. It showed lower production again due to slower gasoline demand despite good ethanol crush margins, but ethanol stocks were lower due to increased exports. Corn has a cushion on the balance sheet with USDA projecting over a 2 billion bushels carryout, but we are catching up on exports and remain above USDA’s pace on ethanol demand so starting to see a positive trend on demand. Basis in the Southeast also continues to strengthen. 

Wheat also showed some life this week after making new lows. Hints of some Russian export restrictions are one thing helping support. Russia has been exporting all they can at rock bottom prices to generate hard currency but they cannot jeopardize their own domestic supply. There are signs they may be having to slow the spigot. Production prospects for the new crop in the field are also not starting off the best. A major storm also hit the Black Sea complicating shipping out of that region. US basis is strengthening which indicates better domestic demand. Weekly exports for wheat did not break the marketing year high, but were still impressive and above expectations. Rumors of China back in the market for US wheat also helped support futures. Condition ratings improved for US wheat this week in what will be the last condition rating report until spring. 

Soybeans continue to trade South American weather. Long term models are trending wetter for the northern growing regions that have been way too dry and hot. Planting pace is the slowest in almost 14 years and the southern growing regions have been deluged by weeks of too much rain. If the weather continues to turn more favorable to production, the debate will shift to how much damage has already been done and how much production has been lost. Better conditions in Argentina will help offset some of the Brazilian losses but may not be able to offset them all. The low water in the Panama canal will continue to add premium to US beans out of the gulf which will affect their competitiveness going to China. China has been buying beans off the Pacific coast but we are now the supplier of last resort not the primary supplier anymore. The market will be watching for Chinese purchases of US beans to increase if they grow more concerned about South American production.

The OPEC+ meeting was interesting today. At the conclusion of the meeting, the group announced there would be no major production changes and the energy markets rallied. Then after the meeting, several individual member countries made their own announcements they would make voluntarily cuts to production. Then energy markets fell on an announcement that seems bullish. Either the market does not believe the additional cuts will come or it reacted to some other macro data. 

Look for soybeans to remain volatile, trading each new weather forecast and trend. Corn is going to continue to drift until we can find something to get some momentum.