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

Corn has tried to keep the key reversal alive this week. Soybeans made a few runs at the $10 level on the November contract this week. November did trade below $10 on Monday, but managed to close above that level and the sellers were not able to push it back below $10 on Tuesday. Then the buyers came out of the woodworks on Wednesday and rallied more than 18 cents. There was some technical buying that helped but the market is starting to pay more attention to the forecast for heat coming to much of the Midwest. Most production areas have had plenty of rain to handle some heat, but it is enough of a threat to put at least a little bit of risk premium back in the market. The market has been trading bigger and bigger crops and perfect weather for the rest of the growing season even though the crop is not made yet. Based on the condition ratings which are the highest in 9 years for corn and beans, it is not without merit that the market is pricing in bigger crops but they are still not in the bin yet. 

Forecast continues to provide plenty of rain and has started to fill in some of the areas that had been dry up until now. We have the bulk of pollination now within the near term forecasts and do not see a major threat. The heat being added later to the forecast later in the season could affect kernel fill on corn but could have a bigger impact on bean production if it materializes. 

The reports this week were mixed. NOPA monthly crush came out showing June set a monthly record breaking last year’s new record. That was above expectations and soybean oil stocks were below expectations. We are now 10 months into the marketing year and have set new records 8 of those months. Last year we set new records 10 out of 12 months. Domestic crush continues to grow making up for slowing exports. However, we need more friendly guidance on biofuels or we are going to hit a wall and be over supplied on crush. Ethanol production was up from last week but fell below the pace needed to reach USDA’s target. We may have to see that adjusted lower by 30 or 40 million bushels. Ethanol stocks were lower than expected and continue to fall seasonally which is a positive sign but gasoline demand dropped in a surprise move. Exports this week were very disappointing on corn with almost no old crop sales. There were big new crop ones though. We have already exceeded USDA’s new target with 10 weeks left in the marketing year but the market was expecting to see a decent pace continue until South American corn was available. We may also see some old crop sales switched to new crop. There were some soybeans purchased by unknown which is suspected to be China. It is a small purchase but if it does turn out to be China it will be one of the first sales at a time of year when we usually see China start buying US new crop beans. We have seen a thawing of rhetoric from Trump on China when he allowed some computer chips by NVIDIA to be sold to China. The hope is that this is setting up for a deal, but the market needs to see something in black and white before we will see a big reaction. We have been fooled by rumors too many times.