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

Corn and soybeans have tried a few times this week to get off the mat but have not been able to stage any recovery. The euphoria on rumors of trade deals and chinese purchases from last week gave way to relentless selling this week when neither was confirmed. Soybeans and corn both broke through some key support levels which brought more selling to the market. Old crop corn carryout is going to be below 1.3 billion bushels but that does not seem to matter right now because everyone is so focused on the new crop. Exports this week were at an 8 week high at almost 50 million bushels. That puts us almost 100 million bushels over USDA’s new revised estimate and we still have 8 weeks left in the marketing year. They are going to have no choice but to raise it again on today’s supply and demand update. But the weather forecast map shows up to 4 inches of rain in Iowa in the next 7 days as a lot of the crop heads toward pollination and that is all that matters to the funds. The fund selling is in control and we need something, anything to slow the slide. We desperately need some trade deals or some good biofuel news from the administration. There were rumors yesterday that the administration was going to approve many of the small refinery exemptions that have been pending since before Trump’s first term. That is not the kind of news we need. 

CONAB (Brazilian equivalent of USDA) released their updated crop estimates on Thursday. They left soybean production unchanged at 169.5 million metric tons which is very close to USDA’s last estimate at 169.3. They raised their corn estimate to 132.0 million metric tons from 128.3 last month. That is also inline with USDA’s last estimate of 132.7 mmt. We will get USDA’s updated estimates today, Friday July 11th at noon on the July Supply and Demand report. 

The market is expecting USDA to tighten up old crop corn carryout and add a little to soybeans. Corn exports are way ahead of the previous estimate, but feed demand may be slowing. On new crop, the market expects USDA to raise yield by just a tenth of a bushel on corn to 181.1 but lower production due to less acres. The yield number will be widely debated as many analysts are pushing their yield estimates due to the high condition rating of the crop. The market is looking for a small decrease in soybean yield from the trend number of 52.5 bushels that USDA has been using. Condition ratings are lower for beans, but do not matter much this time of year. 

We need help on the demand side or a shift in the weather. The calendar is not on our side yet as we do not typically see the lows made in July. August or September are more likely. But historicals are not always helpful since we have never made the high in February before either. Markets will keep watching weather and waiting on something positive on trade or biofuels. The USDA report is a wild card but sure feels like we have priced in a pretty negative number.