This is the SFN Market Report with Brooks Schaffer of Palmetto Grain. Reach him at brooks@palmettograin.com or 843-540-4540.
The market finished last week on a strong note and corn and wheat started off Monday with another positive close. Soybeans closed Monday lower due to harvest pressure from Brazil. Commitment of traders came out friday afternoon and showed massive selling by the funds in corn which should be no surprise to anyone watching the market. The funds were also net sellers in wheat and beans too but not near the amount as in corn. They had such a large long position built in the corn market and there was a lot of panic selling across many asset classes. The funds did not have long positions in the wheat and beans so there was less panic selling in those markets. The market is still going to be volatile as headlines and tweets can move markets dramatically in the fraught political environment we are currently in, but with less fund money in the ag markets we can expect relatively less panic selling on headlines. I think this was on display in Monday’s trade when the dow traded down as much as 1100 points but corn and wheat still closed higher and beans were down on South American harvest pressure. It did not feel like the panic spilled over into the ags. Everything is relative though and if there is enough panic in the broader market, we are still going to feel some effects so we are not completely insulated.
Strength in the wheat was attributed to dry weather in the US Plains and Russia. The US Plains have been very dry and rain last week caused a lot of selling which the market is now reversing on drier forecasts but the strength helped support corn. Brazilian harvest is moving at near record pace after a slow start. Logistic issues have kept basis well supported despite good yields.
Today, March 11th, at noon we get USDA’s March Supply and Demand estimates. This report is usually a nonevent and we do not expect any different from today’s. But there is always a risk with USDA and they have surprised us a few times already this year. This will be the last report before they start showing new crop balance sheets and the market is only looking for very minor tweaks on the demand side of the US balance sheet and on the supply side for South American production. Based only on the pace of current domestic demand, one could make a case for much bigger increases to demand but with the geopolitical uncertainty we are facing, expect USDA to take a very conservative approach. The big report will be on March 31st when we get the Prospective Planting and Quarterly Stocks report.