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

This started off much better than last week for corn. After making new lows on the September and December contract overnight, the market was able to find strength to close higher. In technical chart analysis, this is called a key reversal. Statistically, it is very unlikely that we put the lows in corn in the month of July but we can hope that it signals at least a short term low. The funds have been relentless sellers of corn for months now. They have priced in bigger and bigger crops and have not seen anything yet to spook them enough to cover their positions in a major way. The bulk of pollination is going to take place within the next few weeks which gives us an accurate weather forecast. The forecast is calling for normal temps and plenty of rain for the bulk of the Midwest. However, pollination is not the only part of the growing season that matters. Adverse weather during grain fill can still influence yield by affecting kernel size. As tight as the balance sheet is going into the new crop, that variability in yield can make a big difference if we are going to have a comfortable carryout or a tight one. The market will be paying attention to how the crop finishes since the last few years, the end of the year is where we lost the yield. 

In the spirit of trying to see the glass half full here, one positive part of prices being so cheap all summer is that we have continued to stimulate demand. The US continues to export at a massive pace and we are likely to set the all time record for corn exports. Ethanol production also continues at the pace needed to reach USDA’s estimate. 

The July Supply and Demand report on Friday did not contain any surprises. USDA raised old crop corn exports by 100 million but lowered feed and residual by 75 million offsetting most of that increase. However that does confirm old crop corn carryout at a very tight 1.340 billion bushels. Last year on the June report, USDA had estimated 2024/25 carryout at  2.1 billion bushels. On Friday’s report, USDA did not make any changes to old crop soybeans. On new crop, they lowered corn carryout to 1.66 billion bushels and estimated soybean carryout at 310 million bushels. They raised Brazilian corn production to 132 million metric tons matching CONAB’s latest estimate. No changes to Brazilian soybean production or Argentine corn. They did raise Argentine soybean production a bit. 

USDA released crop condition ratings Monday at 4pm. Corn conditions were 74% good/excellent which is unchanged from last week. That compares to 68% last year and 65% five year average. Soybeans came out at 70% good/excellent. That is a 4 point improvement from last week and compares to 68% last year. 

We need something to happen to spook the funds out of their shorts in corn. It could be a trade deal, biofuel announcements or weather. The longer term forecast is pointing toward the risk of a hot dry finish to the summer, but it has been saying hot and dry 30 days out for months now. Instead of that hot and dry weather getting closer, it keeps getting pushed out always 30 days away rather than seeing it come into the near term forecast. If that heat and dry period does start to get closer, the market will react quickly. Otherwise, market is going to continue to trade sideways to lower.