This is the Market Report with Brooks Schaffer of Palmetto Grain. Reach him at brooks@palmettograin.com or 843-540-4540.
Usually the March USDA WASDE report contains very few changes or surprises and Friday’s report was no exception. USDA did not change anything on the corn or bean domestic balance sheet. On wheat they reduced exports by a small amount and raised carryout by the same amount. USDA did drop Brazilian soybean production by 1 million metric tons and raised Argentine corn production by 1 million metric tons and left all other production estimates unchanged. The market had expected a bigger cut to Brazilian production as almost all other private estimates are still well below USDA’s new estimate. The corn and bean markets were lower before the report but were able to shake off that weakness and close strong on Friday. Corn and wheat were able to find additional strength on Monday. Beans were lower on Monday but after Friday’s strong close did not do any damage to the charts.
There has not been a lot of new news to trade this week so the strong position of the charts is pretty encouraging. Just two weeks ago the corn and bean markets could not rally even when we received bullish news. Now even without something new to push the market, we continue to find ourselves in an uptrend. The funds are defending their near record short positions in the corn, wheat and bean markets instead of buying them back. End users are the buyers in the market right now as they see value at the low price levels we are currently trading at. The low prices are doing their job to stimulate demand and we are heading into the growing season where the seasonals are even more bullish.
The next big report will be March 28th when we get the prospective planting and quarterly stocks report. USDA does not tweak much on the balance sheet for the March supply and demand report because they will update it on April report based on the data from the stocks report. So this report can be a big market mover.
Until we get the stocks and prospective planting report, the market will probably continue to drift. We will be watching South America weather for the second crop corn that is being planted now. They will need plenty of rain in April to get it through pollination. We will also start watching US weather more closely as the weather starts warming in the US.