Brooks Schaffer Market Report for Friday June 21

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

Corn and oilseed markets got a bump on Tuesday from the condition ratings that came out Monday after the close. The corn crop is still the highest rated in 6 years and the beans the highest in 4 years, but the condition ratings did drop this week so the market is paying attention. After getting the bounce on Tuesday, the markets gave it back and more on Thursday on the weather forecasts. While the models are calling for above average heat in much of the US, the forecasts are also trending wet for much of the growing area. Mainly much of the western corn belt. The eastern corn belt is not trending wetter than average. There are areas in the Midwest that have close to 100% saturation down to 80 inches into the soil. That region includes almost all of Minnesota, a big chunk of Wisconsin and North Dakota and a small part of eastern South Dakota and northern Iowa. After such a wet spring and continued rain systems that continue to go through that area keeping the soils completely saturated there cannot be much root development of the crop. Parts of the eastern corn belt have turned dry now going into the heat which is the last thing a crop planted in wet soils needs. None of this is going to matter to the market until we see it reflected in the condition ratings. If or when we see condition ratings drop to reflect these issues, the market is going to react. Long term weather forecasts are historically very unreliable but even more so in the Northern hemisphere growing season when subtle differences in ocean temperatures, jet steam positioning or ridging and other factors all compete to drive the patterns. The models have a difficult time determining which factor will be the main driver of the pattern and where it will place rain. There is still a lot of growing season left and while the forecasts look benign right now, that can quickly change. 

Export sales were delayed by a day this week and will come out Friday morning after this recording. The weekly ethanol production report showed a rise in production when the market had anticipated a small drop. However, ethanol stocks also increased when the market expected a decline. Gasoline demand jumped as expected this time of year which will help ethanol demand. 

Next Friday, June 28th, we will get USDA’s Quarterly stocks and planted acreage report. This report can be a big market mover since it can have big implications for old crop and new crop balance sheets. Then two weeks later, on July 12th, USDA will use those new stocks and acreage numbers and possibly update yield based on current conditions to update their old crop and new crop balance sheets. This all happens as the Midwest crop enters pollination so weather will also be a big factor that the market will be watching.