This is the SFN Market Report with Brooks Schaffer of Palmetto Grain. Reach him at [email protected] or 843-540-4540.
More of the same for news flow this week. Exports remain strong. Domestic demand remains very strong but the market cannot seem to find any bullish traction. Corn is holding on better than beans. Beans are coming under pressure from lack of weather threats in South America. They are now ahead of the 5 year planting pace after a late start so there is no threat to the second crop acres either yet. They still have a lot of the growing season ahead and beans make yield toward the end of it. The crop is far from made but the market is not going to react until or if we see something threatening.
The supply side is what is weighing on the market, but the demand side of the balance sheet is still very bright for both corn and beans. Exports this week were solid again despite the dollar trading toward levels we have not seen since 2022. We saw near daily sales announcements and the weekly report showed beans well above expectations. Wheat was at the upper end of the range and corn was solidly in the middle of the range. Ethanol production this week was very solid again. It dropped from last week, but last week set the all time record and it was not down much from that. Ethanol stocks were shown building, but that happens seasonally this time of year so is not a cause for a lot of concern. Such strong domestic demand is helping pull US basis higher. After a fast harvest, basis across the country has started to firm up despite huge crops of corn and beans this year.
The corn and bean yields may be trimmed again on the Jan report, but the market is not trading the US balance sheets anymore. They are focused on world demand and supply right now and we are facing decent cushions in both the corn and bean balance sheet. More beans than corn and that is why beans have been weaker.
There is been some increased geopolitical risk in the market this week too. The US and UK allowed Ukraine to use donated weapons systems to fire deep into Russia. Russia threatened that this would represent a significant escalation. Thursday in address to his nation, Putin said that he can now retaliate. The markets have added more risk premium, but will probably not add a lot more until we see some kind of escalation. This war has had a lot of rhetoric which the markets have grown somewhat numb to.
Look for volumes to continue to decline as we move into the holiday week. Next week will be first notice day for the December contracts, too. Market will be watching geopolitical risks and South American weather.