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Corn Outlook:
Corn harvest is getting underway, at 7 percent complete compared to 8 percent a year ago, in what is expected to be a massive crop. This means strong demand will be essential in working through an enormous supply. Currently, the market is supported from expectations that the USDA will lower their yield estimate of 186.7 bpa in next month’s crop report, along with recently increasing their export estimate 100 MB to 2.975 BB, which would be a record. While their export forecast may be doable, it is premature to assume that it can be reached this early in the marketing year. Last week, export inspections were 59.5 MB, which was above the average of 57.7 MB that must be shipped weekly to meet USDA’s target. However, it is below the 4-week average of 55.5 MB that is currently being shipped. Also, competition will be intense as Conab has raised Brazil’s production 2.7 MB to 139.7 MB. The bottom line is we know a record crop will be harvested, but for USDA’s target to be reached, exports must be firing on all cylinders.
Bean Outlook
Traders are hopeful of a possible trade deal with China, involving soybeans, when President Trump and Xi have a virtual meeting on Friday. However, it may be wishful thinking as China continues to source from South America. As mentioned in previous comments, China has invested billions in Brazil’s port and transportation infrastructure to reduce their reliance upon the U.S. Last week, the USDA lowered their export projection 20 MB to 1.685 BB, but it may have to be reduced again if China remains absent. Although last week’s export inspections exceeded the previous week at 29.5 MB, they were below the average of 32.9 MB that must be shipped weekly to meet USDA’s forecast. Meanwhile, Conab has increased Brazil’s production estimate 1.8 million tons to 171.4 million, which suggests that China will continue to look to them for their needs. The bottom line is the U.S. may eventually return to supply China, but only if a production shortfall arises in South America.
Wheat Outlook:
There is not much fresh news in wheat. Planting of the winter crop is underway, and 11 percent complete compared to the average of 13 percent. Export inspections 27.7 MB were impressive last week, and above the average of 16.5 MB that must be shipped weekly to meet USDA’s target of 900 MB. Currently, they are running ahead of the pace necessary for their projection to be reached.
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