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

Corn, wheat and beans closed the week on a high note last week despite continued turmoil in the outside markets. The 90 day pause on reciprocal tariffs helped the stock market rebound but the bond market continues to drop and specifically prices for treasury bonds continue to drop at the same time the dollar drops making the interest the government has to pay go up. Usually during times of turmoil we see a flight to the safety of the US dollar and treasury bonds but that has not been the case so far this time. While there is debate about the causes of the drop in treasury prices, the effects are not debatable. The interest the US pays on its debt is going up. The markets do not like all the uncertainty we are currently facing. Policies when they are known, even if they are bad policies, can be dealt with and priced in markets. There is so much uncertainty about what and who the tariffs apply to and it seems to change every day. Just over the weekend we learned the tariffs do not apply to electronics. Then Monday Trump himself said he was going to give some relief to automakers despite earlier assertions that there would be no flexibility on the automotive tariffs. The administration has spent a lot of effort trying to convince everyone this has all been part of one cohesive pla,n and I hope that is correct, but it is a hard sell from where we sit right now.

What all this means for the grain market is that it is that a trade war is not priced in. There is too much uncertainty and back and forth to know what to price in. The funds continue to pull money out of the grains which insulates the grain market from panic in the outside markets but the market still has to find a way to price in the fundamentals of supply and demand. The market has not priced in zero trade with China. On soybeans we do not have many sales that are unshipped on old crop and we expect exports to drop this time of year normally as Brazil’s crop comes to market. Exports of soybeans to China have been trending lower since for a while now and renewable diesel demand has helped to make up for that loss of demand. But as the Chinese tariffs stand right now, there will be zero new crop sold to China and that is not priced in the market. Right now the market assumes there will be some kind of agreement reached and exports will be close to normal. The soybean market actually traded higher when the US and China were increasing tariffs on each other to over 100%. We are moving into the northern hemisphere growing season and a weather threat will send new crop soybeans higher but lack of progress on a deal between the US and China will open up a lot of downside. We have a lot of time to watch it play out. 

USDA released the crop progress report Monday April 14th at 4pm. They estimated corn planting at 4% complete which was 2 points less than the trade was expecting and compared to 6% last year and 5% on average. We are not starting off strong but it is still very early. Soybean planting was estimated at 2% which is only a point behind the trade estimate. That compares to 3% last year and 2% on average. Cotton was estimated at 5% planted compared to 8% last year 8% on average. Winter wheat conditions were estimated at 47% good/excellent which was what the market was expecting and compares to 48% last week and 55% a year ago.