This is the SFN Market Report with Brooks Schaffer of Palmetto Grain. Reach him at brooks@palmettograin.com or 843-540-4540.
We still have all the volatility in the energy markets, with the ups, downs and headline risk from the Middle East. Trump continues to tweet escalating threats, followed by assurances that the negotiations are going well and the conflict could be over soon. Some U.S. troops arrived in the theater over the weekend, and more will be arriving daily, giving the U.S. more options if there are going to be boots on the ground. The war and other geopolitical issues have been driving money flow into the grains, adding volatility. Now we have some fundamental data coming that the market will also need to price in.
On Friday, we got the EPA’s finalized Renewable Fuel Volume Requirements. Overall, they are bullish for biofuels and grain demand long term, but they had been widely telegraphed ahead of the White House event on Friday, so the market had priced them in. There were some subtle disappointments as well. One of the biggest was that foreign feedstocks and biofuels will be eligible for the full subsidy for all of 2026 and 2027. Starting in 2028, they will only get half the subsidy, which is what we were expecting, just not to have to wait until 2028. On Friday, after the release of the information, soybeans sold off in what looked like a clear case of “buy the rumor, sell the fact.” Sunday night and Monday, soybean oil led the complex higher until late in the session, when everything came under pressure.
Today, March 31, at noon, we get the much-anticipated USDA Quarterly Stocks and Prospective Plantings Report. The market is looking for corn stocks to come in at just over 9 billion bushels, which is about 900 million higher than last year on this report. The market is looking for soybean stocks to come in around 2 billion, which is around 100 million higher than last year. For acreage, the market is looking for corn to come in at 94.4 million, which is a 4.3 million-acre decrease from the 98.7 we planted last year. We are looking for soybean acres to come in at 85.5 million, which is 4.3 million more than we planted last year. Now we will be taking these numbers with a grain of salt, since the surveys go out in late February and are back in by mid-March. There is a lot that has changed in that time. It could be the market completely ignores the acreage part and focuses on the stocks side of the report. The funds are very long, and it is the end of the quarter, so profit-taking is a risk. With the global uncertainty we are facing, we do not anticipate the funds wanting to be short ag commodities, but with the big long position, selling even part of that could take a lot of premium out of the market. Once we get this report behind us, we will likely go back to trading headlines. Markets are closed on Friday for the Easter holiday but will have a normal open Sunday night at 8 p.m. for Monday’s trade.