This is the SFN Market Report with Brooks Schaffer of Palmetto Grain. Reach him at brooks@palmettograin.com or 843-540-4540.
Last week corn and soybeans went out with a whimper with soybeans testing support but holding over $10 and corn getting too close to support at $4 for comfort. Sunday night, corn and soybeans opened with a bang in a good way for a change.
I talked a lot about the implications for a late start to the monsoonal rains for the growing regions in Northern Brazil last week. They typically start sometime in September or October. If they start in September, they can get the soybeans in early. They should be almost done planting by the end of October. The Euro model runs have been showing the rains starting in the first week of October. The GFS model runs have been less generous with the precipitation. Last week, the euro also started trending drier and that trend accelerated in the model runs over the weekend. This trend is what the corn and soybean markets reacted to Sunday night and Monday. The logical question is how high can the market go on this news. It depends on how much longer the rains are delayed. The market had a very muted reaction to the dry weather through the whole month of September but that will not be the case if October stays dry. How high we go depends on how late in October we make it before the rains show up. A problem in South America is the best chance we have right now for a sustained rally.
Export inspections were also another bullish factor on Monday. Corn inspections were much higher than expectations. Soybean inspections were within expectations and wheat exports were above. We also saw a few flash sales of soybeans to China Monday morning adding additional support. Wheat was mostly a follower for a change in Monday’s trade as beans and corn were the leaders. But dry weather is developing in Australia in addition to all the geopolitical risks that continue to increase in the Black Sea.
The market is also closely watching the tropical system forecast to move through the gulf and is expected to make landfall somewhere on the US Gulf coast. Hopefully it will bring much needed moisture to the Mississippi River. The rain will not have a beneficial effect on the crops this late in the year but can dramatically help logistics if the Mississippi watershed gets enough of the moisture.
USDA reported the corn harvest advanced 5% this week from 9% complete last week to 14% this week. That compares to 13% last year this week and 11% on average. Soybean harvest advanced 7% this week from 6% last week to 13% complete this week. That compares to 10% last year and 8% on average.