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

Markets continue to try to price in current geopolitical risks despite the whiplash that is causing. It seems like everywhere you turn, something is in turmoil or about to be. The grains are starting to grow somewhat numb to these shifting winds. If you can remember how the market priced in the changing risks surrounding the Russian invasion of Ukraine, at first we saw huge moves with each new headline. Then as the war dragged on and grain continued to flow, the market started ignoring the changing headlines and actually took most of the war premium out. The market is going to do the same thing around the trade war(s). Like the boy who cried wolf, the market is going to grow increasingly numb to all these headlines, right or wrong. We have also seen the funds head for the door of the ag markets in a big way. Spec funds had built a very big long position in the corn during this run up and they sold off over a third of their position last week and almost another third on the most recent commitment of traders report. They have also reduced their net position in wheat and soybeans as well. Taking the spec money out of the market will also mute the ag market reaction to outside influences. 

Export inspections on monday were strong and solidly within expectations for corn and within expectations for beans. Wheat inspections were above expectations and helped support the strength in the wheat market on Monday. Corn export sales remain very strong and inspections show that those sales are being shipped very quickly so they cannot be cancelled later. There is certainly some degree of front loading as importers are worried about the trade war, but the pace is so far ahead of USDA estimates that they are going to be forced to revise it upward at some point. Seasonal decline is expected this time of year in soybeans as the South American crop comes to market but we have not seen near as many cancellations as some had expected. Logistic issues continue to plague Brazilian exporters. 

NOPA crush report came out Monday as well and US domestic soybean crush was sharply lower than expected. As if that was not a big enough hit, soybean oil stocks were also sharply higher and above expectations. February broke the streak of higher monthly records for each month of the marketing year so far. Last year we made it all the way until April. No guidance from the new administration on biofuel policy is the biggest drag on crush right now and also shows up as the higher soybean oil stocks. 

Spring is right around the corner and corn is going in the ground in the Southeast. This is an exciting time of year but the challenges of last year are hard to shake off and current market outlook temper the excitement we feel. The biggest positive i have right now is that we have growing demand for commodities and we do not have such big stocks that weather can be ignored. Any weather scare in the market is going to give us pricing opportunities.