This is the SFN Market Report with Brooks Schaffer of Palmetto Grain. Reach him at brooks@palmettograin.com or 843-540-4540.
Commodity markets were closed on Monday for the President’s Day holiday. They opened back up at 8 p.m. Monday night for the night session and will trade a normal schedule for the rest of this week. Soybeans continued to work higher and closed near the weekly high last week. New crop November actually got in on the action a bit to finish the week above $11. The market is still trading the rumor of China buying more old crop beans for political reasons. Cash market sources indicate Chinese buyers looking for offers on old crop beans last week, but there has been no confirmation of additional purchases yet. The other factor helping support soybeans is the rally in soybean oil. We are slowly seeing more of the administration’s biofuel policy, and there are some parts that are looking more bullish. There are still many unknowns, but we have gotten some wins. As a result, blenders are securing supplies of soy oil and pushing the price higher. What is good for demand is good for the price, so that is helping support beans as well.
The bean market is starting to get some traction, but the 800-pound gorilla in the room is the Brazilian crop. If it’s not lost before it can be harvested, it will be a massive crop, maybe a record. If China buys more beans from the U.S. to placate Trump, it does not change the world balance sheet; it just shifts supplies around. If more of the biofuel rules come out friendly, that does change the balance sheet by increasing demand, but there are still a lot of unknowns.
Wheat actually got some attention last week with a couple of up days and traded back to levels not seen since November. Talk of winter kill in Russia and other parts of the former Soviet Union sparked some short covering.
Corn was able to pull itself above $4.30 but cannot seem to get much traction above that. Exports are still the biggest story in the corn, and the sales last week were impressive once again. Ethanol production bounced back from the previous week’s dramatic drop, which was weather-related.
Markets are watching headlines for more signs of the trade truce with China, watching the Brazilian harvest, Argentine weather, and U.S. biofuel policy. The USDA Outlook Conference is Feb. 19-20, when we will get baseline projections for new crop. Then, the March 31 prospective plantings report will be greatly anticipated.