This is the SFN Market Report with Brooks Schaffer of Palmetto Grain. Reach him at brooks@palmettograin.com or 843-540-4540.
There was a USDA report this week, but it was certainly not the biggest headline of the week. The ceasefire in Iran, announced on Wednesday, was a big market mover. U.S. stocks rallied and crude oil fell dramatically. Early in the session, corn, soybeans and wheat all had big losses, following the energy stocks lower. By the end of the session, though, corn and soybeans had managed to recover most of their losses, showing good support. The ceasefire was seen as very shaky—and was right from the start—but it sure beat the alternative of wiping out all the civilian infrastructure in the Middle East. There still has not been an increase of ships moving through the Strait of Hormuz, and the Iranian side continues to make threats, but both sides have incentive to continue the bellicose talk. The actual direct talks are scheduled for this weekend between the U.S. and Iranian sides.
The April USDA report is not usually a big market mover. USDA does not project any new crop numbers yet, just makes minor tweaks to old crop. They made very few changes on this report, using almost all of last month’s estimates. USDA left corn and soybean carryout unchanged. On soybeans, they did increase domestic usage by 35 million bushels and subtracted it from exports to leave carryout unchanged. The market had expected that, with domestic crush so strong and the bullish biofuel policies announced by the administration. USDA made no changes to the corn balance sheet. They raised U.S. wheat carryout. USDA left all South American estimates unchanged. On world carryout, they raised corn slightly, lowered bean carryout a little and raised wheat carryout more than the market was expecting. On the May report, they will use the acres from the Prospective Planting report and the yield from the Outlook conference to estimate new crop demand to give us their first carryout print. They often make changes to the old-crop carryout estimates on that report as well.
Weather will also play an increasing role in market direction when there are not war headlines in the spotlight going forward. We are moving into U.S. planting, so that will take center stage. There will continue to be some money-flow volatility, but the grains likely remain somewhat rangebound until we know more about the U.S. crop.