This is the SFN Market Report with Brooks Schaffer of Palmetto Grain. Reach him at brooks@palmettograin.com or 843-540-4540.
There have been huge swings in the stock market this week, but that volatility did not spill over into the ag markets. Grains were relatively muted this week with corn and wheat drifting lower and beans finding a little strength. Everyone is looking for a big jump in planting progress on Monday’s update. Western belt has been dry but rain is coming so they have been running hard. The eastern belt had been wet but got a break from showers so they have also been going hard. Analysts are already talking about raising corn planted acreage but we are still in the early innings so a lot can still happen. Wheat has come under pressure this week due to the rains forecast for the Plains and western belt which will benefit the poorly rated crop out there. Wheat finishing positive on Thursday was encouraging and strength came after further escalation between Russia and Ukraine.
Ethanol grind rebounded a bit from last week’s slump. Seasonally we see a drop in ethanol production during April and May so the rebound after only a two week slump can be read as encouraging. The real surprise on the ethanol report this week though was the huge drop in ethanol stocks. It was the biggest single week drop in stocks in 64 weeks. The EIA petroleum demand implies the highest weekly gasoline demand in 28 weeks. This gives us reasonable hope to continue to see very strong ethanol demand for corn.
Exports were encouraging for corn coming at the upper end of very lofty expectations. Soybean sales were at the lower end of expectations falling from last week’s 5 week high, but they are still at a respectable level for this time of year when Brazil is in full export mode. Soy oil exports continue to impress and help support the soyoil market.
Beans found strength this week on comments from Trump and the Treasury Secretary that the tariffs with China are at an unsustainable level and they are talking and expect de-escalation and progress toward a deal. On Thursday, comments from the Chinese side seemed to run counter to that as they stated there were no active talks and they will only submit to negotiations as an equal. It may all be an attempt to save face with their population since the market did not seem to read too much into it.
Market also may have found a little support from long term forecasts showing hot and dry forecasts for the western belt, but the long term models are notoriously unreliable. There are no current major threats for the safrinha crop in Brazil and the amount of drought in the US shrunk this week. The corn crop is going in the ground fast and in good conditions so there is no major threat in the US in the near term either. Will be interesting to see the fund activity this week on the commitment of traders report that comes out Friday afternoon.