This is the SFN Market Report with Brooks Schaffer of Palmetto Grain. Reach him at brooks@palmettograin.com or 843-540-4540.
Thanksgiving week usually brings smaller volumes to the grain markets. Most of the time that means the markets continue to trade the same ranges we were before the holiday week, but lower volume can cause higher volatility if there is something that moves the market. This is especially true in years when first notice day for the December contracts falls on the Friday after Thanksgiving. There are a lot of basis contracts out there that will need to be priced or rolled before Friday. The Dec/March corn spread was offering almost 20 cents in September and on Monday traded as low as 8.25 cents. If the Nov/Jan soybean spread is any indication of how it will trade, expect it to continue to come in this week. That makes it less painful to roll December basis contracts to the March.
Corn continues to trade the same range, soybeans seem to have found some support for the time and wheat continues its slide so far this week. Weather in South America continues to be non threatening. The big corn production region of Argentina has been dry but is soon forecast to get rain. Brazilian farmers are now all but done planting and finished ahead of the average despite getting off to a little bit of a late start.
Wheat started off the week on a sour note after there were no changes in Ukraine. Wheat had started to put a war premium back in the market after Putin stepped up the threats and rhetoric in response to Ukrainian use of western weapons to strike deep into Russia proper. We cannot even count the red lines that have been declared and then crossed now in this war. At some point it may escalate, but the market has grown somewhat numb to headlines. Weakness in wheat is weighing on corn in the absence of anything else to move the market. The dollar finally had a significant setback on Monday after a strong move but the grains were not in a position to take advantage. The funds have gotten out of their short positions in corn and have continued to timidly add to a growing long position. The corn balance sheet looks somewhat supportive to me, but it does not give me warm feelings that the funds were able to exit their massive short position and start building a long one without moving the market very much. If they get spooked and decide to exit their long positions, I do not think there will be sufficient buyers to hold the market close to where it is. That is a threat i see in the corn market.
Markets will continue to primarily watch weather in South America and headlines. The export report we get weekly on Thursday will be delayed until next week. The grain markets will be closed on Thursday, open back at 9:30am on Friday and close early for the day at 1:05pm. Then normal Sunday night open at 8pm. I hope everyone has a wonderful Thanksgiving.