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Corn Outlook:
There is rarely a dull moment in the grains. Earlier this week, President Trump halted attacks against Iran for the umpteenth time to restart peace negotiations. This caused crude oil to decline. Meanwhile, Russia has increased escalation of the conflict with Ukraine. China made a purchase of U.S. soybeans and are rumored to be in the market for corn. Also, weather as a factor may be fading as it looks less threatening through mid-August. Looking at corn, intense heat last week caused the rating to fall 2 points last week to 61 percent of the crop in good-to-excellent condition and is below last year’s rating of 73 percent and the average of 65 percent. According to Ag Watch’s yield model, the national yield is 174.2 bpa versus USDA’s estimate of 183.0 bpa. Meanwhile, exports rebounded last week with inspections of 74.1 MB. However, they were below the average of 70.7 MB that must be shipped weekly to meet USDA’s target of 3.325 BB. The bottom line is that if weather is becoming less of an issue, demand will have to carry the load.
Bean Outlook
Earlier this week, China bought a total of 620,000 tons of soybeans from the U.S., which was their largest purchase in recent weeks. However, this is not a surprise as fob values in Brazil are higher for the moment. Last week, export inspections were 12.6 MB and below the average of 18.5 MB needed weekly to meet USDA’s target of 1.520 BB. Currently, the pace is running short of it being met. While weather in August is always a factor for soybeans, it appears to be fading as normal to above normal rainfall is being forecast in the Midwest for the next 2 weeks. Last week, the rating was unchanged at 63 percent of the crop in good-to-excellent condition and is down from the year ago rating of 69 percent and the average of 64 percent. According to Ag Watch’s yield model, the national yield is 51.4 bpa versus USDA’s estimate of 53.0 bpa. The bottom line in soybeans is that optimism still runs high of China honoring the agreement to purchase 25 million tons. However, we cannot forget that Brazil is in possession of a record crop.
Wheat Outlook:
Russia’s bombing of a city in Ukraine triggered a recovery in wheat this week but it was short lived. Currently, the U.S. remains overly priced compared to our competitors which continues to be a headwind. Last week, export inspections were below estimates at 12.3 MB and the average of 15.5 MB that must be shipped weekly to meet USDA’s projection of 775 MB. If the current pace continues, we will ship 625 MB. Meanwhile, the winter wheat harvest is approaching the finish line at 86 percent done, while harvest of the spring crop is just beginning at 5 percent complete.
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