This is the SFN Market Report with Brooks Schaffer of Palmetto Grain. Reach him at brooks@palmettograin.com or 843-540-4540.
War headlines continue to be the main driver of grain and oilseed market direction, with a few rumors and headlines related to grain supply and demand thrown in for good measure. There has been a slow drip of information about the talks between the U.S. and Iran this week. The Iranian side now admits to there being some indirect talks but says it will not accept the current proposals from the U.S. side. President Donald Trump made a claim that the Iranian side the U.S. is negotiating with gave a “big gift” to prove it represents what is left of the Iranian government. It is believed the U.S. asked them to let some ships through the strait to prove their legitimacy, and that was done. It is still believed both sides are very far apart, but the fact that any negotiations are happening at all is a big change from this weekend. The energy markets have leveled out and have not been making new highs as traders try to gauge how much longer this conflict will continue. It could still go either direction. Markets could wake up to a headline of a ceasefire or a major escalation. Trump has continued to say the conflict will be over very soon, but the U.S. is also moving troops to the region that could be in place and ready by this weekend, by some estimates.
The administration offered temporary waivers to allow E15 sales through the summer this week, but Congress has still not passed permanent E15 legislation. These yearly waivers have been granted for several consecutive years, so they are not a major boost to the market. Without permanent E15, there will not be the investment in E15 infrastructure needed in the East. The administration also removed some tariffs on Russian oil that is afloat but has not taken further action to support the biofuels industry.
Trump’s trip to China has been rescheduled for May 14-15, with Chinese leader Xi Jinping expected to visit Washington for a reciprocal trip at a later date. While soybeans are expected to be included in an eventual deal, they are no longer the centerpiece of negotiations. Subsequent talks are also expected to focus on corn, sorghum, wheat, DDGs and ethanol, along with U.S. meats. It has been reported the mid-May date is not contingent on the war in Iran ending, though it could still be pushed back.
USDA’s Prospective Plantings and Quarterly Stocks report will be released next Tuesday, March 31, at noon. Surveys for the report were conducted from late February to mid-March. Market confidence in this report has declined in recent years, and with so much changing so quickly, it is unclear how markets will react. The data may already be outdated by the time it is released. There are expected to be acreage shifts due to changes in input prices, but there is no clear estimate of how large those shifts will be. The stocks number may be the more useful data point, though trading algorithms reacting to acreage estimates could drive initial market movement.
The White House is hosting an Ag Day event today, Friday, March 27. The market is hoping for a bullish biofuels announcement, much of which may already be priced in.