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

Corn battled back to close strong on Friday and almost got back to unchanged on the week. Beans were not able to overcome the selling and finished last week down 27 cents. Lack of Chinese purchases of U.S. beans is getting harder and harder for the market to ignore. There was more frost risk over the weekend and some very cool temps in the northern growing regions, bringing the growing season to an end in some areas. Grains opened weaker Sunday night but were able to find enough strength to close higher in corn, beans and wheat on Monday.

Traders are positioning for the USDA report this Friday, Sept. 12, at noon. We expect a yield reduction in both corn and beans, but the debate is by how much. Western states look to help make up for some of the losses in the East. USDA’s last yield estimates came primarily from surveys and were supplemented with satellite data and condition ratings. The September report will include actual objective field measurements with ear weights and pod counts. From the private analysts’ estimates we have seen over the last few weeks, the more field samples that are included, the lower the yield seems to be. There has been a lot of disease pressure and some pollination issues in corn in addition to the dryness and warmer night temps in the East. Make no mistake, though, in all likelihood this will be a record crop. But, as in everything in life, what matters is how it compares to expectations. The market had expected and priced in a much bigger crop. So, it can still be a record-large crop, and we could still see a market bounce. Maintaining strong demand will be critical to keeping market strength.

Demand remains very robust, especially for corn. Export sales for new crop are the largest on record now — even higher than in 2021 when we already had 400 million bushels on the books with China. Japan, Colombia, Taiwan, Spain and other EU countries have doubled or tripled their historical buying pace. Meat prices are near record highs. Ethanol demand is growing around the world. Almost everyone who uses corn is making money, but the price of corn is below the cost of production. Something has to give here, and it is unlikely that processors or retailers are going to drop their prices unless we run into a major economic slowdown.

The soybean market needs to see some purchases by China. We are seeing more demand from other countries, which should take up some of the slack, but that will be a very big hole to fill if they buy nothing. We are heading into planting season in South America, so any scare on weather should get a big reaction from the market.

I will be back to you on Friday morning with trade estimates for the USDA September Supply and Demand Report. The report will come out at noon and will likely set the tone of the market for at least a few sessions.