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Corn Outlook:
Corn got off on the wrong foot following the July 4th weekend as the forecast through the third week of the month is non-threatening. Last week, the crop rating rose one-point to 74 percent in good-to-excellent condition and is 6-points higher than a year ago. According to Ag Watch’s yield model, this equates to a national yield of 184.5 bpa versus USDA’s estimate of 181 bpa. Adding to the market’s uncertainty, President Trump is extending the deadline for higher tariffs to August 1st but has slapped Japan and South Korea, who are major buyers of our corn, with a 25 percent tariff. Combined, they account for 22.8 percent of U.S. exports and has grain traders spooked. Meanwhile, exports are robust with inspections last week at 58.7 MB, and above the average needed to meet USDA’s target of 2.650 BB. The bottom line is that without a weather incident, there is little incentive for the funds to cover their short position.
Bean Outlook
Soybeans were broadsided early this week for the reasons mentioned in corn, in addition to President Trump failing to mention a trade deal with China when he was in Iowa last week. Many were optimistic that an announcement would be made, and they became disappointed when one was not mentioned. Also frustrating the bulls is non-threatening weather. This is seen from last week’s crop rating remaining unchanged for the fourth week in a row at 66 percent in good-to-excellent condition, 2 points less than a year ago. According to Ag Watch’s yield model, this equates to a national yield of 50.2 bpa versus USDA’s estimate of 52.5 bpa. Looking at exports, inspections last week were 14.3 MB with China being a no show for the fifth consecutive week. The bottom line in soybeans is that unless weather turns inflammatory in August, there is little to stir bullish interest.
Wheat Outlook:
While corn and soybeans have been under the gun, wheat has escaped much of the selling as the fundamentals are mostly neutral. Harvest is progressing at a slow pace and is 53 percent complete compared to 62 percent a year ago and 54 percent for the average. Exports are improving and were at a marketing year high last week at 16.0 MB. To meet USDA’s target of 825 MB, we must ship 16.1 MB in wheat. The bottom line in wheat is that until harvest is closer to being finished, the funds may be unwilling to cover their shorts.
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