This is the SFN Market Report with Brooks Schaffer of Palmetto Grain. Reach him at brooks@palmettograin.com or 843-540-4540.
Grain markets start off the week with more of the same: very flat trade. Harvest is gaining momentum in the Midwest, as it was a wide-open weekend across the Corn Belt. After the recent showers in the Midwest, the weather looks to return to a very dry pattern.
On yield reports, there seem to be a lot of farmers who are disappointed with their corn yields and some disappointment on the bean yields. This will still be a very big crop, but just not quite as big as the potential we had during most of the growing season. However, with the increase in acres, it is still going to be a record crop in all likelihood.
We still need extremely good demand to keep the market supported. We have a good chance for the demand we need on corn, but there are a lot of questions about soybean demand. The purchases of Argentine beans by China last week turned many who had still held out hope of a trade deal with China involving soybeans. We know it could change at the flick of a pen, but we need that to happen fast to have a chance to help us on old crop. The administration announcing they would be using tariff revenue to send assistance payments does not give us confidence we are making progress on trade.
The crop progress report was released Monday afternoon at 4 p.m. Condition ratings are no longer watched as much, as harvest progress is the more important value on this weekly update. USDA reported corn harvest progress at 18%, which advanced 7 percent from last week. That is only 1 point behind the five-year average. Soybean harvest was estimated at 19%, which advanced 10 points from last week and is only 1 point behind the five-year average as well.
The market is positioning for the Quarterly Stocks Report that will come out today at noon Eastern time. The number today will give us the final carryout figure for old crop corn and beans. If there is a surprise on this report, it will affect the new crop balance sheets when we get the October supply and demand estimates that come out on Oct. 9. The market is looking for only very minor adjustments from USDA’s last carryout projections. They are looking for 1.337 billion bushels on corn compared to last year’s final carryout of 1.763 billion bushels. The market is looking for bean carryout at 323 million bushels, compared to last year at 342 million. A surprise on this report could be a big market mover, but what we saw on several surprise reports this summer is that USDA’s credibility has been seriously compromised. Just because USDA prints a big surprise does not mean the market is going to react and price it in anymore.