This is the SFN Market Report with Brooks Schaffer of Palmetto Grain. Reach him at [email protected] or 843-540-4540.
Today, Tuesday March 25th, is only 6 days away from the all important Prospective Planting and Quarterly Stocks Report that USDA will release Monday March 31st at 12 noon. I will be able to include all the numbers on next Tuesday’s report, but more importantly, we will have a sense of how the market reacted to those numbers. Seems like the market is already in consolidation mode ahead of the report. There is too much noise and back and forth in the tariff headlines for the market to know how to price that in so it has already grown numb to it. Unless we get information about how something will directly affect grains and see it implemented, the market is going to ignore it. The funds continue to get out of the corn market in a big way. They sold another 40k contracts as of the most recent commitment of traders report that came out on Friday. Spec funds are now only long just over 100k which is down two thirds from the high a few weeks ago of over 300k. Market is still watching South American weather closely as harvest and second crop corn planting head toward completion in the center west region of Brazil and harvest starts to pick up steam in Southern Brazil and Argentina. Logistic issues have kept basis very well supported and China has to release soybeans from their reserve to continue to crush beans.
NOPA crush report last week showed a dramatic slowing of US crush as we still do not have any guidance from the administration about the biofuel policies. Without knowing the specifics of the tax breaks, blenders have been slowing their usage of soybean oil. Domestic demand was poised to make up for slower exports on soybeans but if crush hits a wall, that is at risk.
Wheat continues roller coaster giving back Friday’s gains on Monday. Friday, the story was production issues in the US with dry weather in the US Plains and Monday’s headlines were about increasing estimates of the Russian crop.
The Prospective Planting and Quarterly Stocks report will set the tone for the US markets going into the planting season. The market has priced in a big acreage number on corn and a reduction on beans. By Friday’s report we should have the market estimates for the report. Acreage is not the only big number to watch on this report as the quarterly stocks number will also be very important. We get weekly export and ethanol production numbers for corn but do not have as much information about feed usage. If stocks are below what is anticipated, it will force USDA’s hand to lower corn carryout sooner. On the flip side, if stocks surprise the other way, it will give USDA more leeway to slow play demand changes.