This is the SFN Market Report with Brooks Schaffer of Palmetto Grain. Reach him at brooks@palmettograin.com or 843-540-4540.
Friday’s trade has fit the pattern of the last few weeks where we saw a lot of pre-hedge pressure come into the market before the weekend. Harvest continues on a blistering pace. On Monday, USDA reported corn harvest at 81% complete which advanced 15% in one week! That compares to 64% on average. Beans are starting to slow down as harvest nears completion. They were estimated at 89% harvested which only advanced 8% from last week but still well ahead of the average at 78% for this week. Such a rapid harvest has caused some unique conditions in the market but not some of the ones we would have expected with such big crops. We have not seen basis collapse and spreads have narrowed instead of widening.
Monday’s trade was not quick to undo the hedge pressure selloff from Friday like we have seen the last few weeks though. Corn wheat and soybeans all remained under pressure on Monday. Wheat was under selling pressure from a big rain system forecast to move across much of the middle of the US bringing moisture to newly planted winter wheat. Also Russia continues to export wheat at ever lower prices despite all the news about dryness in the major wheat producing regions and also the major conflict being fought around the Black Sea. Corn has been coiling up for weeks now unable to break out in either direction from the 50 and 100 day moving averages. With so much of harvest behind us, we hope the eventual breakout will be to the upside but the lack of movement with so many big export sales is starting to be concerning. The market just cannot get enough strength despite all the large sales being made. On the bright side though it also is not being sold off despite all the harvest pressure.
Soybeans have come under a lot of pressure from the rain in Brazil. Planting pace down there is expected to catch up to the average soon which reduces the concern about pushing second crop corn acres too late to achieve trend yield. Soybeans have not been completely left out of the export sales we have seen the last few weeks but as producers we always want more. The question we cannot answer is if these recent export sales are only due to price or if there is a political hedge in play too with so many unknowns going into the US election. I think strength in soybeans should be sold. If they make a crop in Brazil, the world balance sheet looks very burdensome even with the growing demand. The good thing about growing demand though is that if there is a hiccup or a weather threat, the market will have to price it in quickly.
Another headwind to the corn and bean markets has been falling energy prices. After Israel’s strike over the weekend, energy commodities finished taking the war premium out of the market. There are still things simmering many places in the world right now, but the market’s have decided there is no longer an immediate threat to a wider war.