This is the SFN Market Report with Brooks Schaffer of Palmetto Grain. Reach him at brooks@palmettograin.com or 843-540-4540.
Corn and soybeans had a strong day Friday capping off a good week for the bulls. Monday started off fairly quiet with mostly positioning ahead of the stocks report. The stocks report gives us the final old crop carryout which will be the beginning stocks for the new crop balance sheet. USDA estimated corn stocks at 1.761 billion bushels which was 84 million bushels below the trade expectations. This indicates that demand continues to grow. Low prices are doing their job to stimulate demand. On soybeans, USDA estimated stocks at 342 million bushels which was 9 million bushels below the market estimate which is not a significant difference. Wheat stocks came out at 1.986 billion bushels which was just above expectations but not by a significant amount. USDA also made very minor adjustments to the old crop corn and soybean crop size.
These numbers are supportive for corn in both the short and long term. It continues the trend of reductions to carryout on each report which is the trend we went to see to support the bulls. We are still facing what will likely be a record crop we are currently harvesting, but it will not be as big as we had earlier feared. We are chipping away at the carryout from all sides now. We are still a long way from running out, but it is getting smaller not bigger. It also makes weather problems anywhere else in the world more consequential. There will be much smaller summer crops in the Black Sea. The dry weather in Brazil and Argentina becomes more important for the market to price in.
One interesting thing to note is the high percentage of the grain stocks that are on farm. We have noticed this trend all year that a higher percentage of the grain was held by farmers this year and that held true all the way until the end of the marketing year. Farmers only very reluctantly sold grain this year and it will likely add another challenge to harvest logistics. The tropical remnants did add some much needed water to the Mississippi watershed but more is needed.
Corn basis continues to firm in North Carolina as harvest winds down in many areas. There may be some rail logistic issues due to hurricane damage, but most of the major rail routes into the Southeast appear to still be intact.
USDA estimated corn harvest at 21% complete this week vs 23% expected, 14% last week, 21% last year and 18% on average. Soybean harvest was estimated at 26% complete vs 24% expected, 13% last week, 20% last year and 18% on average.