This is the SFN Market Report with Brooks Schaffer of Palmetto Grain. Reach him at brooks@palmettograin.com or 843-540-4540.
Grain markets were closed on Friday for the Easter holiday. There was no shortage of headlines and tweets over the weekend, but the markets opened relatively calmly on Sunday night compared to the last few weeks. The Commitment of Traders report from last week confirmed funds have built massive long positions in soybeans and corn and a record long position in soybean oil. They have bought back the short positions they had in wheat and started to build a long position in that market, too. Volume has been trending lower in the grain markets as money flow begins to stabilize.
Both the U.S. and Iranian sides continue to issue escalating threats. Trump has extended the deadline several times but says if Iran does not agree to a deal acceptable to him by 8 p.m. today, Tuesday, April 7, he will destroy the whole country. Iran has made its own threats. The next few days will be crucial in determining the direction of the conflict, whether we dial back hostilities or escalate. Right now, the markets are pricing in a resolution relatively soon, or at least no major change or escalation. The trading ranges for energy prices have been shifted higher for some time, even if hostilities end tomorrow.
Grain and oilseeds look to continue to trade in the recent trading ranges as we move into the U.S. planting season. Much of the Midwest is very dry. As of March 31, 44% of corn production is within an area experiencing drought. The rains that came over the weekend are much needed but do not fully fix the deficit. Everyone with moisture will be sitting on “go,” waiting on the crop insurance start dates to pass to get started. We will all be watching weather, but it will take a while for any U.S. weather to move the market either direction. We will not have much new USDA data to trade for a while, as the April Supply and Demand report typically does not include any new crop estimates. USDA usually waits until the May report to start new crop estimates.
Barring any changes in the Middle East, or anywhere in the world for that matter, look for the grains to stay rangebound within the recent trading ranges. We will be watching South American weather on the second-crop corn and U.S. weather going into planting season.