This is the SFN Market Report with Brooks Schaffer of Palmetto Grain. Reach him at brooks@palmettograin.com or 843-540-4540.
Coming off the holiday weekend, corn and soybeans tried to rally in the overnight but were unable to hold the gains through the day session. Wheat closed down double digits after significant rains were added for the US Plains. Selling pressure in the wheat was more than beans and corn could overcome. The commitment of traders report on Friday showed funds were big buyers of corn and soybeans despite no big shift in South American weather. Through Tuesday of last week, they bought over 70k contracts of corn and beans. That starts adding back to an existing long position in corn and offsets a short position in beans and puts them net long beans now too. They were also buyers of wheat and cotton contracts as well but only 5k in wheat and 13k in cotton so not as dramatic as we saw in corn and beans.
Strength in corn came from continued strong export demand despite all the tariff headlines. Countries seem very hesitant to retaliate against ag commodities out of fear of increasing food inflation. Another bullish impetus came from the US Trade Representative’s recommendation for port fees that were released Thursday. The market has been very concerned about these fees because in the basic form as they were first announced, they would certainly kill almost all ag exports. The updated recommendation made after the comment period carves out an exception for most bulk ag products by recommending no fee be charged to vessels arriving empty. Another recommendation is that the fee would not apply to ships under 80,000 deadweight tons which most of our grain ships on vessels that also meet that criterion.
As of Sunday night, US corn planting progress was estimated at 12% complete which was 2 points faster than the market expectations at 10% complete. That is a great deal of progress from last week’s 4% and just barely ahead of last years 11% and 10% on average. Most of the progress was made in the Southeast as wet field conditions continue to hold up those in the Eastern corn belt. The eastern belt is forecast to get more rain over the next 7 which will continue to keep their planters on hold. Soybean planting was estimated at 8% complete which was a point above expectations. Planting progress advanced from 2% last week and compares to 7% last year and 5% on average. Most of the progress was in the Midsouth. The wheat crop was rated at 45% good/excellent which is two points less than last week. The market had expected stable ratings from last week. The biggest drop came from Illinois where it dropped 11 points. Kansas dropped 2 points.
Market will be closely watching weather. Funds buying commodities despite no major changes in the outside markets or weather shifts in South America point to weather premium being built into the market for the US growing season.