This is the SFN Market Report with Brooks Schaffer of Palmetto Grain. Reach him at [email protected] or 843-540-4540.

Volume has been very lackluster on this holiday shortened week. All weekly reports were delayed by a day this week so we got our first look at condition ratings for corn on Tuesday afternoon. Corn was rated at 68% good excellent vs 73% expected. We did not start getting condition ratings this early last year so we cannot compare it directly to the same week, but the first rating last year was 75% good/excellent. The rating we got this year was the 3rd lowest in 10 years but initial condition ratings have a very low correlation with final yield. Despite the low correlation of early condition ratings, the funds will be watching these ratings very closely. USDA also updated planting progress estimating corn at 87% complete compared to 88% expected, 78% last week, 81% last year and 85% on average. Corn planting is still ahead of the average but it is not as far ahead as we have been. There are some trouble areas starting to show up with Ohio only 54% planted compared to 73% on average. There are not major issues, but enough issues that we cannot count on above trend yield just yet. There is still a lot of growing season ahead. Soybean planting was estimated at 76% complete vs 78% expected compared to 66% last week, 66% last year, and 68% on average. Corn planting progress has slowed down compared to the average but beans have not. Beans are a whole week ahead of last year. 

Condition ratings were a bit below expectations but nothing alarming. The funds are building huge short positions and continue to sell corn, beans and wheat. That was on display this week again with corn trading back to the lower end of the range. Old crop beans are trying to hold on to $10.50 but getting impatient with the lack of positive news from the administration on biofuels. The rumors have not been positive with the volume obligations, the small refinery exemptions, or the 45z rules but there has been nothing concrete yet. The market had expected to see something by now and the absence of firm direction by the administration is not being read as bullish to ag commodities. We did see ethanol production rise significantly from last week coming in at the top end of expectations and ethanol stocks declined solidly as well. Ethanol stocks came in below expectations. Increased demand is expected seasonally as more ethanol is blended in summer fuel but it is at least reassuring we will get to or exceed this years ethanol demand estimate. We need to know the rules from the administration to help support new crop demand. 

At the time of this recording we have not seen the export report since its release was delayed until Friday. We expect to see corn remain strong and beans continue to decline seasonally. Some analysts have raised their estimates of Brazil’s second crop corn but that might be premature. While most of the crop was planted in Feb, there was still around 30% that was planted in March and will be below average which will weigh on the overall average. There is a cold front moving into the southern states of Parana and Mato Grosso do Sul which represent 27% of the second crop corn production. The cold front will prematurely end the growing season for some acres.

The market is going to continue to watch weather and condition ratings. We have all the ingredients for a good rally with the funds so short and continuing to sell and everyone on the bearish side of the boat. We just need some catalyst to spark and ignite the short covering. We need a weather scare.

Volume has been very lackluster on this holiday shortened week. All weekly reports were delayed by a day this week so we got our first look at condition ratings for corn on Tuesday afternoon. Corn was rated at 68% good excellent vs 73% expected. We did not start getting condition ratings this early last year so we cannot compare it directly to the same week, but the first rating last year was 75% good/excellent. The rating we got this year was the 3rd lowest in 10 years but initial condition ratings have a very low correlation with final yield. Despite the low correlation of early condition ratings, the funds will be watching these ratings very closely. USDA also updated planting progress estimating corn at 87% complete compared to 88% expected, 78% last week, 81% last year and 85% on average. Corn planting is still ahead of the average but it is not as far ahead as we have been. There are some trouble areas starting to show up with Ohio only 54% planted compared to 73% on average. There are not major issues, but enough issues that we cannot count on above trend yield just yet. There is still a lot of growing season ahead. Soybean planting was estimated at 76% complete vs 78% expected compared to 66% last week, 66% last year, and 68% on average. Corn planting progress has slowed down compared to the average but beans have not. Beans are a whole week ahead of last year. 

Condition ratings were a bit below expectations but nothing alarming. The funds are building huge short positions and continue to sell corn, beans and wheat. That was on display this week again with corn trading back to the lower end of the range. Old crop beans are trying to hold on to $10.50 but getting impatient with the lack of positive news from the administration on biofuels. The rumors have not been positive with the volume obligations, the small refinery exemptions, or the 45z rules but there has been nothing concrete yet. The market had expected to see something by now and the absence of firm direction by the administration is not being read as bullish to ag commodities. We did see ethanol production rise significantly from last week coming in at the top end of expectations and ethanol stocks declined solidly as well. Ethanol stocks came in below expectations. Increased demand is expected seasonally as more ethanol is blended in summer fuel but it is at least reassuring we will get to or exceed this years ethanol demand estimate. We need to know the rules from the administration to help support new crop demand. 

At the time of this recording we have not seen the export report since its release was delayed until Friday. We expect to see corn remain strong and beans continue to decline seasonally. Some analysts have raised their estimates of Brazil’s second crop corn but that might be premature. While most of the crop was planted in Feb, there was still around 30% that was planted in March and will be below average which will weigh on the overall average. There is a cold front moving into the southern states of Parana and Mato Grosso do Sul which represent 27% of the second crop corn production. The cold front will prematurely end the growing season for some acres.

The market is going to continue to watch weather and condition ratings. We have all the ingredients for a good rally with the funds so short and continuing to sell and everyone on the bearish side of the boat. We just need some catalyst to spark and ignite the short covering. We need a weather scare.