This is the SFN Market Report with Brooks Schaffer of Palmetto Grain. Reach him at brooks@palmettograin.com or 843-540-4540.
This is the last full week before Thanksgiving’s shortened week, and volume has already been noticeably lower. Coming on the shortened week next week, we have first notice day on the December contracts. Grain and oilseeds finished last week with a positive close on Friday but that did not undo the damage done to the charts for the rest of the week. The soybean rally started after a rally in palm oil pulled bean oil higher and brought beans along with it. Then when bean oil had a correction it pulled beans lower quickly. The weather in Brazil has remains very benign. They are currently getting the rain they need so there is no bullish story there yet. They still have a good bit of growing season left though. Brazilian planting progress is now ahead of the 5 year average though so after starting off behind, they are going to finish ahead. That reduces the concern about not being able to get the second crop corn planted. One big thing that supported the soybean recovery on Friday was the NOPA October soybean crush report which set a new all time record. Last marketing year we set new monthly records in 10 of the 12 months of the year and a new all time record in March. We are two months into the new marketing year and already broke last year’s all time record. And despite massive crush, soybean oil stocks actually dropped and were below expectations.
The weekly ethanol report last week also broke a record. Ethanol production set a new all-time weekly record and was well above the pace needed to reach USDA’s target. Ethanol stocks did tick higher, but not dramatically and were within the range of expectations. We continue to see near daily announcements of more export sales. Last week’s export totals were not that impressive but were within the range of expectations.
This week started off on a high note with wheat as the leader for a change. Russia has said multiple times that allowing Ukraine to use US made weapons to strike deep into Russia would represent a major escalation of the war and it was announced this week that the Biden administration was allowing that. There have been many red lines declared and then crossed without any consequence but we do not know what Russia’s response will be. Wheat had taken all the war premium out and rushed to put some back in the market. Wheat has been under pressure as condition ratings continue to improve in the US Plains with the recent rains.
More storm systems are forecast to move through the Midwest bringing much needed moisture before the ground freezes. These rains are helping to recharge the subsoil moisture. Markets will continue to watch geopolitical events around the world, corn demand and Brazilian weather to get direction. Look for low volume trade to continue now through at least Thanksgiving. But low volume can mean higher volatility.