This is the Market Report with Brooks Schaffer of Palmetto Grain. Reach him at brooks@palmettograin.com or 843-540-4540.
Grain markets got the USDA Prospective Planting and Quarterly Stocks Report on Thursday then was closed on Friday for Easter. Markets opened back up Sunday night on the normal schedule for the week. Bulls should be very glad to have that report behind us without getting beat up. Using the corn acres USDA gave us and projecting a trend yield and similar demand assumptions we are looking at flat carryout to this year. That means if we have any type of weather scare or issue we could be trimming the balance sheet. We are a long way from running out, but facing even the possibility of a tighter balance sheet will help push prices higher. After getting USDA’s acreage, this market will be more susceptible to a weather scare than we would have been if we were projecting a bigger acreage number. This USDA report was not bullish enough for corn to give us a crazy limit move or anything but what it gave us was the possibility of a rally on threatening weather this spring or summer. Also too much of a rally now would encourage more corn to be planted and we do not want that. I will take this as a win.
The corn market needed to increase demand and decrease supply and we now have evidence of both of those things being accomplished. Stocks for this year and acreage for next year were lower. The stocks coming out lower than expected means either USDA has overestimated last year’s yield or is underestimating feed demand or some combination of the two. We get updated old crop balance sheets on the WASDA report coming out on April 11th. USDA will not change last year’s yield but could make some adjustments to the demand side.
Last year we ended up planting 2 million more corn acres than intended, adding more than 300 million bushels to the balance sheet. That was done in part due to the insurance base price close to $6. We do not have that backstop this year so we all need to hope US farmers do not make that same mistake this year of increasing corn acres above what was intended. I am already anticipating the June Planted Acreage and Quarterly Stocks report has more bearish risk right now because we may “find” some of the acres that we did not see on this report.
Beans came in close to expectations on both stocks and acreage. USDA found a few more beans in storage but not a drastic amount. We are missing exports but continue to offset that by more than expected domestic demand. Beans will also be very sensitive to any weather threats.