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Corn Outlook:
The bulls horns drooped this week from disappointment in the summit meeting between the U.S. and China, as well as stocks of corn, as of September 1st, being higher than expected at 2.095 BB. This is mostly from a reduction in feed consumption because of declining livestock numbers. In the meantime, export inspections last week fell below the previous week at 61.6 MB and were below the average of 63.5 MB that must be shipped weekly to meet USDA’s target of 3.275 BB. However, so far, the pace is on track for it to be met. Demand could face additional speed bumps from rising fuel prices, and interest rates. The yield on Treasury bonds is currently the highest since 2004, meaning higher borrowing costs. In other matters, harvest is progressing at 18 percent complete versus 17 percent a year ago and the average of 18 percent. The bottom line in corn is the funds reduced their longs last week, indicating additional bullish news will be needed to sustain higher values.
Bean Outlook
Soybeans took a hit this week when China agreed to cut tariffs on various ag products during the summit meeting but excluded soybeans. For months, many were anticipating an agreement that included them. This led to the funds accumulating their largest long position since October 2020. While many believe China will fulfill their agreement to purchase 25 million tons each year through 2028, there is some skepticism. Meanwhile, export inspections last week were a marketing year high at 42.3 MB and above the average of 32.9 MB that must be shipped weekly to meet USDA’s target of 1.685 BB. However, because of the slow start for the season, the pace is running short of achieving it. Looking at harvest, it is 17 percent complete versus 18 percent a year ago and 17 percent for the average. The bottom line in soybeans is that once harvest is further along, fresh bullish input may be needed for them to continue higher.
Wheat Outlook:
Unrest continues in the Black Sea region between Ukraine and Russia, but it is offering little support for prices. Exports are struggling with inspections last week of only 11.4 MB. This is below the average of 15.4 MB that must be shipped weekly to meet USDA’s projection of 775 MB. At the current pace, we will ship only 700 MB. Looking at planting of the winter wheat crop, it is lagging at 27 percent complete compared to 32 percent a year ago and 34 percent for the average. The bottom line is wheat needs a bullish story but is having difficulty finding one.
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