This is the SFN Market Report with Brooks Schaffer of Palmetto Grain. Reach him at brooks@palmettograin.com or 843-540-4540.
We are facing a heatwave outside and the grain markets decided to join in and go full meltdown. It is hard to imagine a more discouraging situation. Overall the weather is non-threatening in the Midwest and the funds are piling in the short side. They have been sellers for a while and it has paid off for them so until there is a catalyst to scare them to cover, it is going to be hard to turn the tide. The dollar is weaker, demand remains very strong and continues growing and the crop is a long way from being made yet but until we get to a critical mass of bullish news nothing seems to matter. The most obvious things that would turn the tide are a weather scare in the Midwest, a bullish biofuel policy from the administration or a trade deal that includes specific ag commodities. We got a little help for renewable diesel but there are still a lot of unknowns about how friendly the administration is going to be toward biofuels. In addition to waiting on direction from the administration, some policies and rules are tied up in the funding bill currently being debated in congress so who knows when that will come to resolution.
Weather is all that seems to matter right now. When the maps show multiple inches of rain forecast for Iowa at the end of June and the funds have already been piling on the short side it is hard for the bulls to be heard. Demand remains strong and old crop continues to get tighter. We had another good week of corn exports and have already reached and surpassed USDA’s new raised projection with 10 weeks still left in the marketing year. This week alone, we saw almost 30 million more bushels sold. We also saw some new crop flash sales to Mexico. Ethanol crush was down from last week but still on pace to reach USDA’s current estimate.
Monday’s Planted Acreage and Quarterly Stocks Report will be a big one. Everyone is focusing on the acreage portion but the stocks side could also be a big market mover. The thing about a huge selloff leading into a big report is that we will already have some of the bearishness we could see priced in. It sets us up for increased odds we can get some kind of a bounce in a sell the rumor buy the fact situation. Note that I said some of the bearishness. It is also possible it is so bearish the funds continue to push the market lower. Good, bad, or ugly we will have the number to trade Monday at noon. The market will try to get that priced in quickly and will be back watching weather and waiting on biofuel news. Something, anything to stop the bleeding.