Brooks Schaffer Market Report for Friday January 12

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

Grain and oilseed markets continue to chop ahead of USDA’s data dump this afternoon, Jan 12th, at noon. Beans have been weak for most of the week. Corn and wheat have managed to scratch out some positive closes this week. Wheat sold off on rumors of Chinese cancellations and beneficial moisture forecast for the Plains on one day only to rally back the next on rumors of additional Chinese purchases and an arctic blast that may cause some winter kill in the Plains. Exports were not much help for the bulls this week as they all came out at the low end of the range and the only new sale we saw announced this week was a sale of corn to Mexico. 

CONAB (the Brazilian equivalent of USDA) was out on Thursday with their updated crop estimates. They estimated the Brazilian bean crop at 155 million metric tons which is 5 million metric tons, or 183 million bushels, less than their last estimate and just below the trade guess for USDA’s estimate coming out today. CONAB’s made a bigger adjustment to corn, estimating the corn crop at 117.6 million metric tons which is 7.6 million metric tons, or 300 million bushels, less than the average trade guess for today’s USDA report. Historically USDA has been more conservative on making adjustments to the South American crops so CONAB’s adjustment does not guarantee we will see such a big downward adjustment but it does increase the chances. 

The range of guesses for today’s USDA data is very wide meaning there is not much consensus from the market about what we will see. When a market has been sold off so hard ahead of a report, it sets us up to already have a negative number priced in the market so seeing numbers near the lower end of the range should not be perceived as too bearish. The average of those trade guesses is very close to the last numbers we got from USDA for the US crop. In addition to the updates to the US balance sheets on crop size, demand and carryout we also get the quarterly grain stocks on this report. The market is looking for bean and wheat stocks to come in just below last year’s stocks at this time and corn to be about 2 billion bushels above. 

The soybean market has been pounded over the last few weeks as general soaking rains finally arrived in Brazil. Today’s report could be a stark reminder to the market that we are facing extremely tight carryout in the US and of the increasing demand we are seeing. That could be the shot in the arm the soybean market needs to put in a good support level and rally.