This is the SFN Market Report with Brooks Schaffer of Palmetto Grain. Reach him at brooks@palmettograin.com or 843-540-4540.
Last week would have been a lot more constructive in the grain and oilseed markets if we had not had friday. We saw a washout in almost everything Friday and although we still managed to have some weekly gains in corn and soybeans they were not nearly as much as they could have been. A lot of the buying in the market was sparked by dry weather in Argentina. While many analysts continue to raise their estimates of the Brazilian crop, the weather in Argentina has not been quite as perfect. They have faced some dry stretches with heat and that is forecast to continue. Most of the crops have just been planted so it is still early in the growing season but the market had been pricing in near perfect crops in both Argentina and Brazil. The market was quick to add some weather premium back into the market. Some unforecast pop up showers in Argentina started the selling and the funds and farmers piled on Friday. Over the weekend the forecasts were shifting the heat and dry back into the main growing regions so the market gained back much of what was lost. Everyone needs to take note that soybeans take several days to gain back what they can lose in one day. There is more downside risk in beans right now than upside potential. Corn has good demand and a relatively tighter balance sheet so I do not see as much downside risk in it, but there is always more risk than we want to admit to ourselves. The thing about a weather market is that it can be over before you know it. All it takes is a minor shift in the pattern.
In addition to the weather on Friday, abysmal exports on the holiday delayed report also gave the bears some ammo. Soybeans were at a marketing year low and corn was not far off. Corn, wheat and soybean exports were all well below market expectations. We have not seen any flash sales to start the week but export inspections were not discouraging on Monday.
We are getting the volume back as we start the first full week of the new year. It will be capped off with the big crop report coming out this Friday Jan 10th at noon. It will be a quarterly stocks report and a monthly supply and demand all wrapped into one. USDA will use the data from the stocks survey to adjust the US crop size. The market is looking for minor revisions lower in the crop size. Some are also expecting adjustments higher in demand but after USDA made such large adjustments on the December report, I think USDA will take a more wait and see approach to further adjustments. We will all know on Friday at noon.