This is the SFN Market Report with Brooks Schaffer of Palmetto Grain. Reach him at brooks@palmettograin.com or 843-540-4540.
Despite tensions flaring once again in Iran with shots from both Iran and the U.S., the grain markets opened Sunday night on the defensive and never were able to get any traction, closing near the lows. Corn fell double digits and closed at new lows. Soybeans and wheat were also down double digits. Today (Tuesday, June 30) is the end of the month, end of the quarter, first notice day for July futures contracts, and also USDA report day for one of the biggest reports of the year. After building a big long position in the ag markets this spring, the funds have sold off most of that position and are going into this major report near neutral. At noon, USDA will give us quarterly grain stocks estimates and planted acreage. The market is expecting corn stocks to come in around 5.4 billion bushels, soybeans around 1 billion bushels, and wheat around 900 million bushels. Despite all the chatter this spring about big shifts in acreage, the market is only expecting relatively minor changes to planted acreage estimates. The market is expecting corn acreage to come in right below 95 million acres compared with the 95.3 million that was intended. Soybean planted acreage is expected to come in at 85.3 million compared with March intentions of 84.7 million. This report has a history of setting the tone of the market for the next few weeks until we get the July Supply and Demand report on July 10 at noon.
The selloff on Monday came despite weather forecasts showing record-high temperatures coming for much of the growing regions. After much of the central U.S. has been too wet, the market perceives the heat as needed heat units. The question that we do not know yet is if the heat will be transient and move out within a few days or if it will be longer-lasting, remaining in place as the crop develops further and heads toward pollination. There are several areas in the country that are facing weather issues that may not have shown up in crop conditions yet. Northern Illinois and western Iowa have been extremely wet. Ohio had significant issues getting crops planted. Parts of Kentucky this weekend got 10 inches of rain, with some significant flooding. Overall, national crop condition ratings fall within the five-year average, so until the market sees a shift, it will continue to trade like everything is OK and on track.
Monday afternoon, USDA released updated condition ratings. The agency estimated the corn crop at 67% good to excellent. That is a 1-point decline from last week. The market had expected conditions to remain the same as last week at 68%. That is below last year’s rating of 73% good to excellent but above the five-year average of 64%. Soybeans also dropped a point from last week to 65% good to excellent. That is also 1 point below expectations of 66% and 1 point below last year’s rating, which was also at 66%. It is above the five-year average of 62%. The condition ratings we get next Monday will show what the heat has done to the Midwest crop.