This is the SFN Market Report with Brooks Schaffer of Palmetto Grain. Reach him at brooks@palmettograin.com or 843-540-4540.
Corn, wheat and soybean markets continue to move lower, probing for support. A weakening Brazilian real after the surprise election of Lula da Silva in Brazil over the weekend put pressure on soybeans to start the week, and the selling did not let up much during the week. Midweek, Russia announced it was restarting grain shipments through the Sea of Azov, and wheat immediately sold off, pulling corn to new lows. The market reaction came despite the fact that there is no ceasefire that we know of. So Ukraine will still likely be specifically targeting those ships. The Russian grain shipments will be accompanied by military escorts, but they have a long route through the Sea of Azov, and then they have to traverse the Black Sea before reaching relative safety in the Mediterranean Sea. The Chicago wheat contract has given up all the war premium it put back in the market this summer when wheat shipments came to a standstill. The U.S. wheat market has dropped because, despite this shipment disruption, we have not picked up any export demand. Export demand is very weak for U.S. wheat, and until we see some big purchases, the bulls will struggle to get much momentum. Wheat was making new lows on Thursday until there were rumors of China looking for some U.S. wheat, which turned the market around. It helped corn recover from new lows as well. The wheat market needs to see some follow-through on those rumors to find support.
Soybeans could not find much support, even with near-daily additional export sales this week. Chinese buying is old news at this point. Harvest continues to pressure prices as there are still very good soybean yields being reported out of the Midwest. Corn yields are mixed, but some of the pressure may be corn and beans coming to market when farm storage is filled. Harvest was wide open all this week, so farmers should have made up a lot of ground that will be reported when USDA updates harvest progress on Monday. Another rain event moves through next week in the western belt, which will slow progress again for anyone lagging. Weather in Brazil remains mostly nonthreatening so far. The forecast shows some big showers on the way that may delay planting in some areas, depending on totals, but there are still many unknowns. Planting has progressed ahead of average for most areas. The super El Niño has not had a negative effect yet, but there is still a lot of growing season ahead.
When the market is falling, everything looks bearish, and that is where we are right now. The funds have been massive sellers in all commodities. They likely will not press and get short with all the uncertainty, but we need something to change their sentiment to start buying again.