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Traders are hopeful that the partial trade deal struck between the U.S. and China last week will lead to increased sales of ag products. However, many are cautious until an agreement is signed as we have been down this road before only to see the negotiations fall apart. Meanwhile, the recent winter storm in the upper Midwest has slowed harvest and brings USDA’s corn yield estimate of 168.4 bpa into question. Currently, only 22 percent of the harvest is complete versus the average of 36 percent. Although the lag in maturity and harvest is supportive, keep in mind that exports are horrendous and running 64 percent below last year. Inspections last week were 18.5 MB and must average 39.1 MB each week to reach USDA’s target of 1.9 BB. Currently, they are on track for 806 MB. While the focus now is on the shrinking supply, demand cannot be overlooked either.
Soybeans are underpinned from USDA’s yield estimate of 46.9 bpa coming into question because of the recent winter storm in the upper Midwest. Because of the storm and late maturity of the crop, harvest is dragging at 26 percent complete compared to the average of 49 percent. Additional support stems from exports running 7.4 percent above a year ago with inspections last week of 35.0 MB. Currently, we are on track to ship 1.837 BB versus USDA’s projection of 1.775 BB. While this is creating a brighter fundamental picture, be aware that estimates for Brazil’s 2019-20 crop are forecast to be up 4.7 percent from a year ago to 120.3 million tons.
Wheat is underpinned from dryness in Australia and rumors circulating that the partial trade deal with China might include purchases of wheat. This would be a plus for the market as global stocks are near a record high. As of last week, winter wheat planting is 65 percent done which is on par with the average. Looking at exports, inspections last week were 16.9 MB and below the average of 18.2 MB that must be shipped each week to reach USDA’s target of 950 MB. Right now, shipments are on track for 865 MB.
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