This is the SFN Market Report with Brooks Schaffer of Palmetto Grain. Reach him at brooks@palmettograin.com or 843-540-4540.
The June USDA Supply and Demand report is usually not a big market mover, and this year was no exception. We are not far enough into the growing season to see a change in yield estimates, and we do not yet have the planted acreage data to adjust acreage. So, the only things USDA usually tweaks are demand and South American production.
USDA increased U.S. corn exports but decreased corn demand for ethanol by the same amount to offset the change. That left U.S. old-crop corn carryout unchanged. The agency raised world corn carryout by increasing production estimates in South America.
For soybeans, USDA raised domestic crush and cut exports by the same amount for the old crop. It did not make any changes to the new crop. World soybean carryout increased slightly because of a small increase in Argentina’s production, but not enough to generate much market reaction.
For wheat, USDA did the heavy lifting in the last report with the big cuts it made. It made a much smaller cut this month to U.S. wheat production, but the market now feels the production shortfall is at least coming into focus, even with the lowest condition ratings we have seen. World wheat carryout remained stable and was very close to the previous estimate.
The funds have liquidated the biggest portion of their long positions in the ag sector. Traders are still watching the constantly changing headlines about the war in Iran, but the ag markets are not reacting to each development the way some other markets are. One minute, we are back to threatening to blow Iran off the face of the earth, and the next, the strike is reportedly canceled and there may be a peace deal to sign this weekend. No one knows what to believe. Such is the fog of war in the Trump era.
The big reports of the summer begin with the June 30 planted acreage and quarterly stocks reports. Then, the July 10 USDA WASDE report will incorporate the new acreage numbers, adjust old-crop demand if there is a surprise in the stocks report, and adjust new-crop yield based on crop conditions. Those reports have a history of producing major market-moving surprises and could set the market’s direction for some time.