This is the Market Report with Brooks Schaffer of Palmetto Grain. Reach him at brooks@palmettograin.com or 843-540-4540.
Grain and oilseed markets lacked any directional conviction to start the week. With no news to move the market, markets are just waiting for the USDA report that comes out this Thursday, April 11th at noon and past that, for spring weather to matter. We have lots of model projections about the upcoming growing season, but there is not enough confidence for the market to put much into them yet. A possible bullish scenario is that current models show an aggressive transition to La Nina by late summer which could lead to cool water off the coast of Alaska and California. This cool water off the west coast is the most common way the atmosphere loses the westward momentum that brings the summer showers to much of the Midwest. This is just one of infinite possible scenarios for summer weather so the market will not be pricing it in until we have a better idea. Nutrien’s Atmospheric Scientist Eric Snodgrass said we will have a better idea by the first of June on how the transition to La Nina will be affecting the Midwest weather patterns. But still that is just one factor that influences the weather.
The weather is going to matter a lot more than it would have if the corn acreage number was any larger. At 90 million acres and trend yield, we do not add any to the cushion in corn. If we end up planting more acres and that shows up on the acreage report at the end of June, the market will quickly take out the weather premium. But the opposite is also true, if we plant less acreage the weather will matter more. The corn market had looked very bleak for several months but there are at least positive things we can talk about now which is at least a step in the right direction.
This Thursday at noon, USDA will give us updated old crop balance sheets. They will not give us new crop balance sheets yet but they will update the old crop ones based on the stocks report. They will not make any changes to the supply side but will update the demand side. They will also update South American production. Later in the week we will get the market expectations for the numbers. Barring something new coming out in the headlines, this will be the best shot for some new information to move the market but I am not expecting much. If corn rallies too early, we will plant more and hurt ourselves in the long run.
Funds are starting to add back to short positions in corn and beans defending their positions instead of bailing. Outside markets were mixed on monday with energies selling off putting pressure on bean oil.