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

The ProFarmer crop tour is behind us and now priced in. The market is watching the last few weeks of US weather that matters and waiting for the USDA Sept report that comes out on September 12th at noon. The bulls are hoping we have the highest corn yield already behind us from USDA’s August report. After ProFamers was lower, they are hoping USDA’s Sept corn yield will also be lower and it will establish the trend direction. Soybeans have found some strength on weather. The window is closing for US weather to matter, but it has not closed completely yet. It is very hot and dry through much of the Midwest and pod counts represent yield potential not yield yet. Much of the crop was late planted so many areas of the belt are going to need good weather through September to reach the potential that USDA and ProFarmer have found in the bean crop. This dry stretch and any threat of an early frost will catch the market’s attention quickly. The other weight that beans have to overcome though is the million acres we added to the balance sheet on the August report. That adds more of a cushion to yield. It is going to take a weather problem in South America to dramatically change the picture in the bean market. 

Exports were strong this week for both corn, beans and wheat. The Paris milling wheat contract finally started to rebound this week which helped the US wheat markets find a bid. Soybeans have also gained some strength from the rally in global vegetable oils this week. With wheat and soybeans both catching a bid, corn had no choice but to follow. One or two days do not make a market but if we can hold these gains and achieve a good weekly close, it starts looking much better on the charts. The funds still have big short positions in corn and beans and will start buying positions back when they feel like the tide and or seasonals turn higher. Many times the technicals are self reinforcing meaning that if everyone believes they are true and behaves accordingly that is what actually makes them true. So if the charts look bullish and it triggers the funds to take profits by buying their short position back it will make the market go up and make the seasonal low be behind us. A couple caveats though, this could partially depend on how much more corn needs to be priced. A tremendous amount of farmer corn has been priced in the last few weeks. If the funds do start buying positions back, the upside could be limited by farmer selling if there is still enough left to price to do so. Secondly, we have already had a couple bullish technical signals that have been ignored so this one could be too but we can be optimistic. Only time will tell and hope for the best!