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Normally, during this time of the season, the focus is on harvest progress and yields. However, they are currently taking a backseat to soaring energy costs that are increasing inputs. Since August, crude oil has risen 32 percent in value while natural gas has shot up 122 percent since April. This will have a huge impact on the grains, especially corn because of increased harvest and drying costs. Meanwhile, the increase in fertilizer costs for next spring almost guarantees fewer planted acres of corn. These issues, plus weather in South America, will make for an interesting winter. In other developments, ending stocks have risen to 1.5 BB which is an adequate supply. Exports are slowly improving but were disappointing last week at 29.3 MB. They must average 50.7 MB each week to reach USDA’s target of 2.090 BB. Looking at harvest, it is progressing swiftly and is 41 percent complete versus the average of 31 percent.
Just a few months ago, the soybean bulls were running all over themselves, but are nowhere to be found now. This is because of ending stocks rising to a comfortable level of 320 MB, as well as production in South America expected to be at a record. In addition, China is facing an energy crunch from increased costs of coal that is impacting processors. This could affect soybean imports but, so far, the USDA has not reduced them. Meanwhile, export inspections last week were a marketing year high at 59.2 MB with China taking 72 percent of shipments. Looking at harvest, it is progressing at a fast pace and is 49 percent done versus 40 percent for the average.
The outlook for wheat remains positive as stocks are shrinking. Since 2016, domestic ending stocks have been declining and are currently at 580 MB, their lowest since 2013. Meanwhile, global stocks have been on the downswing since 2019. However, exports could use a boost as they have been trending lower since 2016. Last week, inspections were a token 15.9 MB. The decline in futures midweek is disappointing for the bulls. However, they were drug lower from weakness in corn and soybeans, as well as Egypt canceling their tender. Looking at winter wheat planting, it is 60 percent complete which is par for the average.
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