This is the SFN Market Report with Brooks Schaffer of Palmetto Grain. Reach him at brooks@palmettograin.com or 843-540-4540.
The week started off with a lot of excitement that then faded in the corn and beans as the week went on. The jump in corn was mostly from weather. The fund selloff had taken all the weather premium out of the market, then got a quick reminder the crop is not made quite yet. The heat that was supposed to move west is sticking around over much of the Midwest for longer now. The worst-hit states will be the Dakotas, but the whole Midwest will see temperatures above average for the next few weeks. This will likely last right through pollination. Much of the Midwest has been well watered and has a full moisture profile, so this is not a yield crisis. This may not take any yield off the crop, but it is just recognition by the market that the crop still has a ways to go. The market needs some weather premium, and that is what the corn market was trying to do this week.
Soybeans did not rally 50 cents in a day because of some hot weather. There were rumors of Chinese purchases and signs of further improvement in trade. We got confirmation later in the week of sales made to China, including some old-crop bean sales. Those will likely be rolled to new crop, but the market was very encouraged by the activity.
Corn and beans will continue to watch updates to the weather models as we get pollination in sight for corn. Beans will keep some additional volatility from the outside markets as we continue to navigate the on-again, off-again war in Iran. Crude rallied, pulling bean oil with it, when Trump said the ceasefire was over on Wednesday, then fell when he said Iran was begging to make a deal on Thursday. Not that long ago, headlines like that would have elicited a much bigger market move, but now it is an every-week thing.
Surprisingly, wheat was the leader to the upside on Thursday, rallying double digits. Europe continues to face a heat wave of its own, hurting production and giving some strength to wheat. There were also rumors of Chinese buyers looking for U.S. wheat offers, although that does not make economic sense. In the world we live in right now, the fact it does not make economic sense for China to buy U.S. wheat does not mean it will not happen. We saw that on the old-crop beans.
Today, Friday, July 9, we will get USDA’s updated Supply and Demand estimates, taking into account the data from the Planted Acreage and Stocks Report. Since we had only very minor changes on those reports, the market is not looking for many changes on this report. Some years, USDA makes updates to the yield estimate from its trend yield calculated in the winter. The market is not looking for any changes to either corn or bean yields and a slight reduction to carryout on corn and a small increase on beans. But it is USDA, so we could always have a surprise. The market will go back to trading weather and trade headlines.