This is the SFN Market Report with Brooks Schaffer of Palmetto Grain. Reach him at brooks@palmettograin.com or 843-540-4540.
We have seen a fast planting pace in the US so far and the forecast indicates a warm and dry stretch over the next 7 days for most of the Midwest. The planters will keep running wide open and we will be well past the halfway point for corn when we get USDA’s planting progress on Monday. The 5 year average for corn for next week is 56% planted and 37% on beans and we should exceed both of those. Similar to last week, with no visible weather threat and fast planting pace the funds continue to head for the door. There is very little weather premium in the market now and a lot of growing season ahead.
We did get a moment of optimism this week when it was announced that the US Treasury Secretary will be meeting with a Chinese delegation this weekend in Switzerland. China recently announced another big round of stimulus as the slowdown in trade bites their economy. The meeting was confirmed by both sides, unlike the last few weeks, so it is the first concrete sign of progress. In response to the headline, the grains and oilseeds rallied sharply in the overnight and morning trade. However, the optimism was tempered though by Trump’s insistence that he was not going to lower tariffs on China anytime soon and the market gave back the gains through the day session. China also said they were going to vigorously defend the points that are important to them.
Ethanol production declined a bit more than expected this week but is still well above last year’s production this week. It is also still well above the pace needed to reach USDA’s target. Ethanol stocks were also lower indicating continued demand but gasoline demand moved lower calling into question future demand. We will have to see if we have more weeks of declining gasoline demand or just an off week. Corn exports were off the chart this week blowing expectations out of the water. They were the highest in 15 weeks. We saw some flash sales of corn on Thursday as well. Wheat new crop sales were higher than expected but old crop sales were minimal. Soybean sales were at a respectable pace for this time of year and within expectations.
This Monday, May 12th at 12 noon we get the May USDA monthly report. The May report is a big one because it’s the first time we see the whole new crop balance sheets. USDA will use the acres from the March planting intention report and a trend yield. Sometimes they do adjust the yield based on planting but doubtful we see any adjustment yet. We also get the first demand estimates for the year and then a final carryout for the new crop and updated old crop carryout. The market is looking for old crop corn carryout to be close to the same as last month at 1.433 billion bushels and new crop corn at 2.02 billion bushels. For soybeans, the market is looking for old crop carryout at 368 million bushels and new crop at 375 million bushels. A big deviation from these numbers will see a market reaction but will go back to trading weather.