Brooks Schaffer Market Report for Tuesday February 13

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

Grain and oilseed markets closed higher on Monday despite strength in the dollar and weakness in crude oil. There were also big general rains across much of Argentina and Brazil furthering crop development which should have been bearish to the market. It was not much of a move higher but after the last few weeks we have been through, anything moving higher gives us at least a glimmer of hope especially in the face of additional negative factors. Friday we got the commitment of traders report that showed the funds continue to build massive short positions in the corn, bean and wheat market. We are approaching record short levels for this time of year. This builds in at least the possibility of a rally if something were to spook the funds to cover those short positions. 

Beans were up almost double digits despite the negative USDA report last thursday where they added 35 million bushels to the balance sheet by trimming exports. They also did not trim Brazilian production by near as much as CONAB (the Brazilian equivalent of USDA) or many private estimates. The strength after those reports are released shows the market pricing in a smaller crop than USDA and closer to the level CONAB and others are estimating. 

China begins its Lunar New Year on Wednesday so there will be zero Chinese activity for the week. USDA begins the outlook conference this week on Thursday and Friday. This will be the first official discussion of acres for the upcoming year. USDA will release their ‘baseline’ acres number on Thursday and then new crop balance sheets on Friday. Official survey based intended acreage will come out on March 31st. This time of year is slow for news. We are watching Brazilian soybean harvest progress which was estimated at 23% last week compared to 17% last year. We are also watching second crop corn planting that is estimated slightly ahead of last year’s pace as well. 

This is a market where we need to be sellers of rallies. The market needs to discourage corn acres in the US and there is a lot of farmer owned grain that needs to be priced.