This is the Market Report with Brooks Schaffer of Palmetto Grain. Reach him at brooks@palmettograin.com or 843-540-4540.
It was nice to have a monthly supply and demand report on a Thursday so we could finish pricing it in before the weekend. As expected USDA trimmed both corn and bean yields but not drastically. We have better confidence that the harvest lows are now behind us, but the bulls need to get going now to have a chance to see any upside. December corn has been unable to push through the resistance at $5 and November beans have been unable to break the resistance at $13. As harvest has progressed rapidly, rallies are probably going to be met with some farmer selling so we need more momentum to push higher.
USDA gave us harvest progress yesterday, Monday Oct 16th at 4pm and estimated the corn crop at 45 percent harvested from 34% last week, 43% last year and 42% five year average. Soybeans made massive progress from last week estimated at 62 percent harvested compared to 43% last week, 60% last year and 52% five year average. There has been some rain in the last few days that will slow harvest progress temporarily. We need much more water across much of the country to recharge subsoil moisture and help put water back in the Mississippi before the soils freeze. Mississippi river levels are approaching last year’s record lows which makes exports more difficult and expensive. The continued drought in Panama lowering drafts through the Panama canal also makes Brazil grain more attractive for China. Now that harvest is getting over the hump, the market will start turning more focus to demand. Domestic demand remains robust but we have a lot of challenges to overcome for exports.
Exports were exceptional last week for corn, beans and even wheat. We remain well behind the pace needed to reach USDA’s estimates but it is positive to see some good weeks of exports despite the challenges we face. We have seen an uptick of Chinese demand for US wheat which is very good news. This is despite all of the ships China is loading out of Ukraine. There are rumors that the wheat and corn coming out of Ukraine is very low quality. China had massive rains ahead of their wheat harvest which damaged their crop so they may need significantly more than what the market has been pricing in. Russia continues to try to dump wheat on the world market at almost any price to generate hard currency which is what has been weighing on the market. News from the war in Ukraine is losing air time with the new conflict in the Middle East and getting pushed to the back of many people’s minds but it is still a tender box. The market has priced in near perfect grain movement despite no slowdown of hostilities.
Brazil planting progress has continued ahead of the 5 year average but is behind last year’s rapid pace. The weather in the northern growing regions is expected to turn dry for the next 10 days and the southern growing regions are going to remain too wet to plant. We expect that planting pace to slow down over that period. Argentina is forecast to finally begin getting some moisture after the multi year drought but we will be waiting for confirmation. Weather models continue to struggle to get a handle on the patterns.