This is the SFN Market Report with Brooks Schaffer of Palmetto Grain. Reach him at brooks@palmettograin.com or 843-540-4540.
Grain and oilseed markets continue to trade mostly weather and closely follow geopolitics for direction. Weather model runs for South America show hints at improvement for crop development. It is trending dryer in Brazil where they need a break in the rain to catch up on harvest and wetter in Argentina where they desperately need rain. The market it still trying to gauge the size of the second crop corn in Brazil. They have to get the bean crop out and the corn crop planted. If either of those get pushed into March, they risk the return of the dry season before the crop is made. The corn price rally has given them ample incentive to try to plant as many acres as possible, still to be determined if the weather will allow it. I am more than a little impressed by how well soybean prices have held on in the face of big South American crops right around the corner.
The grain markets have gotten a little bit of a break from all the tariff talk. The latest headlines are specifically on metal imports not targeting specific countries. Last week Mexico announced they were ending the ban on GMO corn imports. Mexican courts ruled the ban violated the provisions of the trade deal signed during the first Trump Administration. This will probably not be the last word on this because Trump himself could blow up the previous agreement with the blanket tariffs he was/is threatening. On Monday, we saw a big purchase of corn by Mexico which was encouraging to the bulls.
Today, Tuesday February 11th, at noon we will get the latest and greatest from USDA on the February supply and demand report. The Feb report is not usually a big market mover (reminder i said that about the December one too and USDA made a fool of me). They will not make any changes to US crop size, only on the demand side of the balance sheet. The pace of corn for ethanol and also exports as well as US domestic soy crush are all well above the pace needed to reach USDA’s current estimates so those could be revised higher. But with all the uncertainty, I would not be surprised to see USDA take a more wait and see approach. The USDA outlook conference is coming up on Feb 27-28th and then the Prospective Planting and Quarterly Stocks report comes out on March 31st. The numbers we get from the Outlook conference are often the most bearish we see all year. Those are compiled by the economists and not based on any actual producer data. The prospective planting report is expected to show a big jump in corn acres and reduction in beans.