This is the SFN Market Report with Brooks Schaffer of Palmetto Grain. Reach him at brooks@palmettograin.com or 843-540-4540.
Markets could not manage to find much support most of the week, with December corn making new lows on Thursday early in the session before rallying to the close. Crude oil traded back down to levels not seen since the very first days of the war in Iran. There is some surprise at how fast energies have dropped. Throughout the conflict, we have heard from analysts that the longer the strait was closed, the longer it would take to get things back to normal. This week, daily transits had reached 50 to 60 ships per day, which is less than half the 130 to 140 per day before the war, yet crude oil had already taken almost all the war premium out of the market. Then, on Thursday, Iran attacked a ship transiting the strait, calling into question how stable things actually are, and energies quickly spiked in response. The spike in crude helped add a little to the bounce we saw in grains and oilseeds on Thursday as well.
We finally got some buying in the grain markets ahead of the Planted Acreage and Quarterly Stocks report coming out next Tuesday, June 30, at noon. Soybeans were the leader to the upside on decent volume after a lackluster week. Fund selling finally abated and brought the bottom pickers into the markets. Trade estimates came out showing the market expects USDA to show us around 300,000 fewer corn acres and 700,000 more soybean acres. That is way less than the whisper numbers floating around the market of 1 million to 3 million fewer corn acres. The market will have to price in the updated stocks numbers, too, for the old crop. A surprise on either acreage or stocks will have to be quickly priced into the market.
National condition ratings remain firmly in the middle of historical averages. However, that glosses over the issues that different parts of the country are facing. The northern half of Illinois and eastern Iowa have had the wettest June in 134 years, while the northwest corner of Iowa has had the driest June in 112 years. Parts of Nebraska and Kansas are finally starting to get good rains, which will dramatically help their crops. This crop is far from perfect, and there is a lot of growing season left. The funds bailed out on their long position, but I see it as unlikely they will press the short side until we make it further through the growing season. USDA’s reports next week may set market direction, at least until we get USDA’s updated Supply and Demand estimates on July 10. USDA will update its whole balance sheet using the updated acreage and old-crop stocks information from next week’s report. The agency will also likely update yield based on satellite data and condition ratings.
Corn markets will be closed next Friday in observance of Independence Day.