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Corn values tumbled this week even though global stockpiles are down 19.1 percent from a year ago. This is because of the curve ball thrown by the USDA in the crop report when they raised their yield estimate to a record 181.3 bpa, 2.9 bpa higher than last month. This caught many off guard as the August crop ratings were down 4 points and their estimate is seen with a lot of skepticism. Yields in corn have been tough to peg this season because of the variability in weather. Looking at exports, inspections for the first week of the new marketing year were 30.0 MB which is a bit disappointing. Corn harvest is just beginning and is 5 percent complete, slightly ahead of the average of 3 percent. News surfaced mid-week that there may be a new round of trade talks with China. However, traders are skeptic as they have been burned before.
One cannot candy coat the fact that global stockpiles of soybeans are massive, an eye-popping 14.3 percent higher than last year’s record. U.S. ending stocks are a record as well at 845 MB. This means that a weather event in South America may be needed this winter to arouse the bulls’ interest. However, that may not be as farfetched as one thinks because Brazil has produced three record crops in a row with the max being four. Will Mother Nature bless their crop again or place a hex? The other factor that could bring the bull’s back is if the trade dispute with China gets resolved. Meanwhile, export inspections for the first week of the new marketing year were 33.9 MB. Last week, the crop rating rose 2 points to 68 percent in good-to-excellent condition and compares to the 10-year average of 60 percent.
Although global stocks of wheat are shrinking, down 4.7 percent from a year ago, the market has been slow to respond as exports have yet to pick up. The Black Sea Region continues to get the bulk of global business. Although the USDA has not increased this area’s export estimate since last month, production is expected to rise 3.5 million tons. Export inspections last week were 15.7 MB and are no attention getter. Winter wheat planting just commenced and is 5 percent complete which is par for the average.
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