This is the SFN Market Report with Brooks Schaffer of Palmetto Grain. Reach him at brooks@palmettograin.com or 843-540-4540.
Corn and soybeans continue to trade weather. Monday’s selloff came in part from the forecasts showing big precipitation totals forecast for Iowa, Illinois, and Indiana. The system that was supposed to bring the rain turned into a derecho and while it did bring some rain, it also left some damage in its wake. It was not near as big and did not have windspeeds as high as the one in 2020 that caused the crop and infrastructure damage. There were reports of some crops leaning but not widespread breakage. The crop is also much less vulnerable to wind damage at this stage of production compared to early August when the 2020 derecho came through. Monday and Tuesday’s weather did not bring big market moving damage to the crop but it was a reminder to everyone that the crop is not made until it is in the bin. We still have weather left that matters. This is especially true in soybeans where it is August weather that makes yield for beans in the Midwest.
Lower prices stimulate demand and we are already seeing results from that. The weekly ethanol production report showed a huge increase in ethanol production which was at a 29 week high and just shy of the all time weekly record. Despite ethanol production jumping so dramatically, ethanol stocks were much lower than expected. Exports for corn beans and wheat were all respectable this week falling in the middle to upper end of the range of expectations. Soybeans finally had a respectable showing for new crop exports after months of no activity. We got the NOPA crush report for June this week that showed soybean crush below expectations but set the record for June production. Crush margins have increased dramatically and we have seen processors aggressively bidding for beans again after a very quiet summer.
Markets are going to continue to trade mostly weather until the funds get scared enough to cover some of their shorts. Until then, we need end users to see value at these levels to be buying to help the market find support. The funds have ever growing record short positions in corn and growing shorts in beans. They have to cover those shorts sometime, but that does not have to happen anytime soon until they see a threat.