This is the SFN Market Report with Brooks Schaffer of Palmetto Grain. Reach him at brooks@palmettograin.com or 843-540-4540.
The big news over the weekend was the U.S. reaching a deal with Iran to end the conflict for 60 days. Trump says the deal will immediately open up the strait to all ship traffic, and the U.S. will stop our blockade. We do not know the details yet, and there is concern from some other countries about what may have been given to Iran. Analysts and markets are all trying to guess and price in the details, but energy markets were sharply lower and U.S. stocks were sharply higher on Monday. Grains traded to new lows overnight but then managed to battle back to unchanged and even finished higher. The war premium has long been taken out of the grains as the funds liquidated their long positions. There has been a noticeable increase in commercial buying at these levels after the massive selloff. We are back to a situation where everyone using corn and beans is making money, but no one producing it can. There is a definite limit to how long that situation can last.
The weather in the Midwest remains relatively benign. There are some storms with damage, some areas too dry and some areas too wet, but overall there is not a big enough narrative to bring strength back to the long side. There is still a lot of the growing season left, and things can change quickly.
USDA’s weekly Crop Progress report came out Monday afternoon at 4 p.m., showing slight improvements in overall crop conditions. USDA rated 68% of the corn crop good to excellent. That is 1 point higher than last week and 4 points lower than last year. USDA rated 66% of the soybean crop good to excellent, which is also up 1 point from last week and the same as last year’s rating for this week.
The grains will be closed on Friday for the Juneteenth holiday. We are quickly approaching the June 30 Planted Acreage and Quarterly Stocks report, followed by the USDA July Supply and Demand report. These reports can be big market movers if there is a surprise in any of the numbers. The July S&D report will incorporate the new acreage number from USDA, and they may also adjust yield based on current crop conditions. That is a lot of variables to price in, and then everyone will also be making predictions about long-term forecasts, which can change from one run to the next. We do not have a comfortable enough carryout for the market to ignore any weather threats this summer.