This is the SFN Market Report with Brooks Schaffer of Palmetto Grain. Reach him at [email protected] or 843-540-4540.

We had a much quieter Monday this week compared to last week. Both the corn and bean balance sheets are tight enough that we cannot afford any weather hiccup, but with the fast planting pace and a lack of widespread prevent planting anywhere in the country we also have the potential to add a lot to the balance sheet. It all comes down to weather. USDA estimated corn planting at 78% complete which is what the market was expecting. That compares to 62% last week, 67% last year and 73% on average. Soybean planting was estimated at 66% complete which is a huge jump from 48% last week. The market was expecting 67%. This compares to 50% last year and 53% on average. 

Soybeans got hit hard last week by rumors about Trump’s biofuel policy. In his first term, Trump was not friendly to biofuels in his policies. We had hoped for a change in his new administration. We had seen some hopeful signs with the candidates he appointed to offices and some of the approaches his administration seemed to be taking. The administration putting representatives of the oil industry and the renewable fuels industry in a room and told them to work it out among themselves was one of the things that gave us the most hope. Out of that approach we were hoping for higher targets on renewables. The rumor was 5.25-5.75 billion gallon obligations but then last week rumors were pointing to only 4.65 billion gallons. We were hoping to see some of those rules announced within days but last week the EPA administrator said we will see them in the next few months. Which was another big disappointment. The market is struggling to operate in the uncertainty. We still cannot get year round E15 approved and have to rely on emergency wavers to keep it in the gasoline supply. In Trump 1, they approved almost all exemptions that refiners requested to avoid buying and blending ethanol. That undermined the biofuel obligations. The Biden administration did not approve those exemptions, but they did not deny them either so they are still sitting there pending. The EPA says they will review them but has not given an answer on which way they are going to rule on them. Approving them will be a big hit to the biofuel industry and therefore grain demand. 

We got the commitment of traders report Friday after the close. The funds have built a much bigger short position in the corn than expected. They have been massive sellers as the crop gets in the ground quickly despite the tightening up of old crop stocks. They will be watching weather closely and a weather threat will quickly make them insecure in those positions. We need a weather scare before the June 30th Planted acreage report. We also need to see some more trade deals. We keep hearing that they are close and coming soon but the market can only wait so long before we need to see some concrete progress.