This is the Market Report with Brooks Schaffer of Palmetto Grain. Reach him at brooks@palmettograin.com or 843-540-4540.
Grain markets started off the week trading lower. Outside markets have not offered a clear direction with a big bounce in stocks and a lower dollar being a bullish influence but crude oil was also down hard which is bearish to the grains. Israel entered Gaza this weekend which is being reported as the start of the ground campaign. Crude oil finished Monday’s trade down almost three dollars a barrel which signals that the market does not believe other oil producers are going to get involved in the conflict.
Export inspections came out monday morning and soybeans were down hard from last week’s record number. They still fell within expectations but the drop from last week is enough to catch the markets attention since last week we saw Chinese importers cancel Brazilian purchases. The hope was those were replaced with US purchases, not just canceled due to declining crush margins and not replaced. The bulls are hoping for revisions to next week’s inspections to make up for the drop this week. Corn inspections were solidly within expectations and wheat inspections were at the lower end.
We have been closely watching Brazilian planting progress and the biggest producing state has now fallen behind the five year average due to the recent heat and dryness. The atmospheric flow is moving in the right direction to signal the start of the monsoon rains but the totals have been disappointing so far. The dryness in the Amazon basin seems to be robbing the pattern of moisture instead of adding moisture like it normally does. The weather models have struggled all year to pinpoint the precip so expect more volatility especially in the beans as we watch the model runs and planting progress. General rains were added to the model runs on Monday and that was widely cited as part of the reason beans fell under so much selling pressure. Southern Brazil continues to get hammered by flooding rains for over 6 weeks now. Argentina did pick up some moisture from storms but like we see with our summer storms, there are winners and losers. Not everyone got good general rains.
US harvest has been stalled by over a foot of snow in the northern growing regions this weekend and good general rains across much of the central regions. As of Monday, USDA estimated corn harvest at 71% complete compared to last week at 59% and the five year average of 66%. We have fallen behind last year’s rapid harvest when we were at 74% this week. They estimated soybean harvest at 85% complete compared to last week at 76% and the five year average of 78%. Similarly to corn, beans are behind last year’s rapid pace when we were at 87% complete as of this week.
Wheat has fallen under pressure from rains in Australia and those beneficial storms in Argentina. Wheat also came under some pressure from the ships able to load at Ukrainian Black Sea ports. They have not been able to achieve the volumes they were before Russia bombed so much of the port infrastructure, but they are starting to gain some momentum.