This is the SFN Market Report with Brooks Schaffer of Palmetto Grain. Reach him at brooks@palmettograin.com or 843-540-4540.
Sunday night, the grain and oilseed markets opened with a bounce higher led by wheat. That was on continued strikes on grain infrastructure by Russia and Ukraine. Russia continues to hit the major port city of Odesa as Ukraine is rumored to be nearly out of interceptors. Ukraine continues to hit Russian shipping in the Sea of Azov. Turkey reportedly has stopped issuing permits for some ships through the Dardanelles. Geopolitical risks are going even higher, but the market is still waiting for sustained buyer interest in U.S. wheat and other commodities. Right now, the market expects European origins to receive much of the increased demand due to the loss of Black Sea wheat. The U.S. will likely get most of the corn business that was lost, but that will not show up for a while yet.
The market could not hold the gains from the overnight as traders position for Wednesday’s big USDA report. On Wednesday at noon, we will get USDA’s August Supply and Demand Update. This will be the first yield estimate from USDA of the year. The agency will use surveys and satellite imagery to adjust yield from the trend estimate we have been using so far. NASS will incorporate FSA-certified acreage data into production estimates as well. Separately, FSA will release detailed acreage data, including prevented-plant acres for each crop. Analysts’ expectations are for small adjustments lower to both yield and production. The market is looking for a corn yield at 182.3 compared with USDA’s trend of 183. For bean yield, the market is looking for 52.8 vs. 53 trend. For U.S. carryout, the market is looking for 1.7 billion bushels of corn and 302 million bushels of beans, compared with 2 billion bushels of corn and 320 million bushels of beans in old crop.
There were showers in many parts of the Midwest over the weekend and a forecast for more over the next seven days. The temperatures are also forecast to moderate. Corn conditions were unchanged from last week at 61% good or excellent. That compares with 72% last year and the five-year average of 64%. Soybean conditions declined 1 point from last week to 62% good or excellent, compared with 68% last year and the five-year average of 62%.
Look for sideways trade to continue as we see positioning ahead of the report. Last year, USDA threw big curveballs, adding both a lot of corn acres and bringing yield in higher than even the highest market estimates. We do not know if or what the curveball may be this year. We may see a lot more volatility Wednesday at noon when the numbers drop.