This is the Market Report with Brooks Schaffer of Palmetto Grain. Reach him at brooks@palmettograin.com or 843-540-4540.
Grain and oilseed markets traded lower Friday and Monday. Much of the Midwest is facing significant heat from the ridge that has setup over the Southeast. Parts of the eastern belt have dried out but for the areas with adequate and above moisture levels, the heat may be welcomed. The market traded higher through most of last week looking at these forecasts but have now given those gains back and more. The extended forecasts continue to show above average heat, but also above average precipitation for much of the growing regions. With the high condition ratings the crop has maintained so far, the market does not see a big threat from this forecast right now so the funds are selling.
You would not know it by looking at the closes from Friday and Monday but we do continue to get supportive demand news. Weekly grain export inspections this week saw corn wheat and soybean exports all within expectations with corn maintaining its pace well above the pace needed to reach USDA’s current estimate. NOPA May crush report came out on Monday and domestic crush was well above expectations and at a record for May. With the exception of April, every month of the marketing year we have set a record for crush in that month. This shows how strong domestic crush remains despite some pressure on margins. Despite the increase in crush, soybean oil stocks were down from last month and below expectations.
CONAB (the Brazilian equivalent of USDA) released their updated production estimates last week after USDA’s Wednesday report. They are still miles apart from USDA. CONAB estimates soybean production 209 million bushels below USDA and they lowered their estimate from last month so the divide between them narrowed but only very slightly. CONAB raised their estimate for corn production but still remains 311 million bushels below USDA. I think this divide is so wide and has been for so long now the market is just using the average between the two as what the actual number will be.
USDA rated corn conditions at 72% good/excellent. That is 1 point below expectations and compares to 74% last week and 55% last year. The soybean crop is rated at 70% good/excellent which is also a point below expectations. That is down 2 points from last week but much higher than the 54% last year this week. Cotton crop ratings dropped 2 points from last week to 54% good/excellent compared to 47% last year.