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There is no progress reported in the U.S.-China trade spat, but the grains are getting a boost from a $12 billion aid package offered by the Trump Administration to producers effected by the tariff. In addition, it was announced that further tariffs against the EU would be held off while negotiations are ongoing. Meanwhile, the crop rating for corn remained unchanged at 72 percent in good-to-excellent condition. This compares to the 10-year average of 64 percent. While this instills ideas of a record yield, extreme temperatures during June and early July may have peeled back some of the potential. In other developments, export inspections were strong last week at 51.6 MB but below the average needed to reach USDA’s target of 2.4 BB. The funds have boxed themselves into a corner as they increased their shorts 300 MB last week to 670 MB. This could haunt them as global stocks-to-usage are at their lowest since 1973-74.
Soybeans have rallied the past few sessions as the Trump Administration’s announcement of an aid package offered to producers affected by the import tariff is providing support. Meanwhile, the EU has agreed to buy more soybeans if additional tariffs are held off. In other developments, the crop rating improved one-point last week to 70 percent in good-to-excellent condition. This compares to the 10-year average of 61 percent and points to a possible record yield. While August is a critical month for soybean development, no threatening weather is on the horizon. Looking at exports, inspections last week were respectable at 26.5 MB but below the average needed to reach USDA’s projection of 2.085 BB. As it stands now, we will fall slightly short of their target. The funds added 60 MB to their shorts last week increasing them to 420 MB. However, they have probably covered most of them this week.
Wheat has been on fire the past few weeks because of declining production and export prospects in Europe, Canada, Australia and the Black Sea Region. While this is good news for the U.S. exports have been slow to respond. Inspections last week were a modest 14.6 MB and must average 19.5 MB each week for USDA’s target of 975 MB to be reached. In other developments, the rating for spring wheat fell one-point last week to 79 percent of the crop in good-to-excellent condition but is well above the 10-year average of 66 percent. Meanwhile, winter wheat harvest is winding down at 80 percent complete. Looking at the funds, they increased their shorts 65 MB to 190 MB. However, the strength this week implies that they have been forced to cover.
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