This is the SFN Market Report with Brooks Schaffer of Palmetto Grain. Reach him at brooks@palmettograin.com or 843-540-4540.
Ag markets are closed today, Friday, April 3, for Good Friday. It is not a federal holiday, though, so we will get the Commitment of Traders report this afternoon. Markets will open as normal at 8 p.m. on Sunday, April 5.
On Tuesday, we got USDA’s Prospective Planting and Quarterly Stocks Report. This report can be one of the biggest reports of the year, as it can set the tone for the market for the next two months, until planting gets rolling in the Midwest. We can also get a surprise on the stocks side of the report. There were no major surprises in the report for corn, soybeans or wheat, and the market went right back to trading mostly headlines.
USDA estimated corn acres at 95.3 million, which is more than 3.5 million acres less than we planted last year. Soybean acres were estimated at 84.7 million, which is a 3.6-million-acre pickup from last year. One surprise on the acreage side was cotton. The market had expected a slight reduction in acres from last year, but USDA estimated acres to be up 300,000. On the stocks side, USDA estimated corn stocks at about 100 million less than the average trade estimate but within the range of expectations. Soybeans came in just slightly above the average trade estimate, but within the range as well.
There was no major surprise to hold everyone’s attention. The acreage numbers are moving targets, as they are not yet set in stone and are still being determined in a normal year, and this year is far from normal. So, the market is back to trading headlines and money flow. The grains are trying to distance themselves from trading whatever crude oil does. Unless there is a major escalation in the war in the Middle East, the energy markets seem to have found the range they are comfortable trading within. The war is far from settled, and there are still major logistical issues that continue to compound the longer the Strait of Hormuz remains basically closed. There is still increased volatility in the markets from before the war, and there is certainly always some amount of risk of a major escalation, but until that happens, the energy markets seem comfortable in this range. If crude does not rally another leg higher, it reduces the speculative money flow coming into grains as a spillover. The spec funds are already very long in ag commodities, so there is risk of losing some of the premium that comes out of the market.
USDA will not give us a look at the new-crop balance sheets until the May Supply and Demand Report. They will use the acreage from the prospective planting report and the yield from the Ag Outlook Conference to estimate new-crop demand. So, we will not have much in the way of USDA data for the market to focus on for a while. We will continue to watch South America weather on the second-crop corn in Brazil. It is very dry across much of the U.S., but it is too early for that to matter in the Midwest.
I hope everyone has a very good Easter!