This is the SFN Market Report with Brooks Schaffer of Palmetto Grain. Reach him at brooks@palmettograin.com or 843-540-4540.
I have mentioned previously I was surprised at how well soybeans had held on despite the forecast for rain in Brazil which should get the crop planted and up. I guess I spoke too soon as it did not take soybeans long to give back a whole dollar of gains. They are well behind historic planting pace in Brazil, but with the rains now all but certain in the next few days they will get the crop in timely enough to not lose any yield potential. Now we all know that getting a crop planted does not guarantee yield, you have to get through the growing season too. However, the market is going to assume normal yields until there is significant evidence otherwise. With normal yields the US balance sheet and world balance sheet are very burdensome on beans and that is why there has been so much weakness. We have seen some bullish news items but they have struggled to hold the attention of the market.
Harvest in the US continues at a blistering pace due to the dryness. Soybean harvest was estimated at the fastest pace in over 5 years and corn was close to that record as well. Despite the fast harvest pace, bushels are finding their way to storage and so basis and spreads are having to do some work to keep bushels coming to market. The action in the spreads and basis is a little surprising with a big crop and fast harvest pace.
A big rally in crude last week helped support both corn and beans as the energy markets priced in a war premium due to escalating tensions in the Middle East. It is pretty surprising to see crude give back all of that premium after Israel said they would not retaliate against Iranian energy infrastructure. They are still going to retaliate, but just not against Iran’s energy infrastructure so we will see what they do hit. Energy markets are also weighing global growth slowing. China came out talking a big game of stimulus ahead of their national holiday but a week later the details are still murky and underwhelming. Market is still very much worried about potential for growth in China.
NOPA crush report was out this week and showed US soybean crush setting another record for Sept. Last crop year we set new records 10 out of 12 months for soybean crush. September is the first month of the marketing year and we started off by breaking last year’s record. USDA’s Thursday export report was delayed by a day and will come out this morning but all week we have seen some big flash sales announced in both corn and beans so the market is expecting some big numbers. On Wednesday, we saw corn flash sales totaling 1.9 million metric tons. That is almost 75 million bushels in one day. 1.6 million metric tons was one sale to Mexico. That almost makes the top 10 biggest sales of all time. Buyers are seeing value after the hit futures have taken. That is a good sign.