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

Grain and oilseed markets cannot find much to get excited about this week so far. Corn actually traded back down to the lows posted right before the report. However, acreage from USDA last week should also help keep support under the market to keep us from selling off too much. We need to keep in mind that it would not be a good thing for the corn market to rally too much during planting season. That would bring more corn acres into production and we need to discourage corn production. The corn market needs to encourage demand and discourage production. The acreage report confirmed that we are making progress on both. Stocks were lower meaning demand has been increasing and acreage was also well below expectations meaning production has been discouraged. 

The report increased the chances (and/or magnitude) of seeing a weather premium in the market in the growing season. With the corn and bean acres projected and a trend yield and similar demand we will not be adding much if anything to the balance sheet. Trend yield is far from a given so the market will be quicker to put a weather premium in the market than it would have been if acreage was any higher. If we see more acres on the June planted acreage report, the market will then be quick to take whatever weather premium out of the market. I hope to have good pricing opportunities before that report comes out on June 28th. Until we get closer to that, we can be more patient. 

Ethanol data this week was supportive as production was up 7% from last week’s near record. This suggests that USDA is going to have to raise their estimate, hopefully in the next report. Ethanol stocks are still very high and were up again this week but gasoline demand has rebounded significantly and gasoline stocks were much lower so that should help draw down these ethanol stocks. 

There have been several headlines this week that have brought more sellers to the corn market. Rumors that China was canceling Ukrainian purchases got the market nervous. The rumors are that they are buying up domestic supplies to add to their reserves and push up domestic prices to encourage more domestic planting. Exports were a bit disappointing this week too and that also was a bearish force but domestic demand has been the driver of most of the demand growth for both corn and beans. Also the markets have been trying to understand the implications of finding bird flu in cattle this week. It was not bullish that Cal-Maine had to kill nearly two million egg hens in Texas due to an outbreak at their facility. Supportive news this week was that we have seen a lot of complaints about the quality of Russian wheat exports and some shipments were stopped due to the quality.