On The Money Grain Commentary 4-5-18

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Corn Outlook:

The grains were rocked this week from China imposing a 25 percent import tariff on U.S. products that included corn, soybeans, and wheat. This should not come as a big surprise as they placed a tariff on other products a couple of weeks ago. Bear in mind that China buys little corn from the U.S. Once the air clears, the grains will be searching for a leader this growing season in which corn may take the role. Because of cool, wet conditions in the eastern Corn Belt, fieldwork is being delayed. The forecast through the end of the month shows that progress will be slow. If so, producers may be inclined to plant fewer acres of corn and more soybeans. In the meantime, exports are improving with shipments last week of 53.1 MB. They must average 57.3 MB each week to reach USDA’s projection of 2.225 BB.

Bean Outlook:

Soybeans took a huge hit this week from China’s import tariff on soybeans. Although they are our largest customer, their primary origin of sourcing is South America until late summer. That said, their import tariff is mostly for show purposes as they will look toward the U.S. later in the season. Long story short, they need U.S. soybeans as they cannot fulfill their requirements from South America alone. Looking at exports, inspections last week were 19.9 MB. The pace of shipments has declined 74 percent since November. Normally, the pace falls 85 percent until the end of the marketing year.

Wheat Outlook:

Although China put wheat on their list for import tariffs, it had little impact on values as they are not a large importer of U.S. wheat. The factor supporting wheat during the melee in corn and soybeans this week is that only 32 percent of the crop is rated in good-to-excellent condition, a decline of 18 percent from last fall. This is the lowest rating in 16 years. Moisture is needed as the crop comes out of dormancy, but the areas in the southern Plains show limited rainfall for April. Looking at exports, inspections were modest at 13.2 MB and must average 17.7 MB each week to reach USDA’s projection of 925 MB.

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