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USDA’s recent ending stocks estimate for corn at 1.432 BB are tight, but sufficient to meet current demand. However, this is likely the high mark for the year as their yield estimate of 179.5 bpa is too high, as only 65 percent of the crop is rated in good-to-excellent condition compared to a rating of 69 percent a year ago. Achieving last year’s yield of 172.0 bpa might even be a stretch to reach. According to Ag Watch’s yield model, the national yield is closer to 168.7 bpa. With weather in the upper Midwest forecast to see mostly dry conditions through the end of the month, the bulls have a strong argument. Meanwhile, the bears have a case as well as exports are slipping. Inspections last week were 39.1 MB with the pace of shipments having fallen 38.6 percent since mid-May. Furthermore, shipments to China have declined 31.0 percent over the past 3 weeks. That said, both the bulls and bears have an argument which mean volatile price swings will persist.
Soybean ending stocks are snug at 155 MB, but the USDA may have to tighten them further as their yield estimate of 50.8 bpa is probably too high unless there is a rebound in the ratings. The current rating shows that 59 percent of the crop is in good-to-excellent condition compared to 68 percent a year ago. Last year’s yield was 50.2 bpa acre with Ag Watch’s yield model showing it closer to 48.2 bpa. This implies that weather for the rest of the month and into August will be critical. While this is supportive of a bullish stance, there is a crack in the dam, namely exports. Inspections last week were a meager 7.3 MB and must average 21.6 MB each week for the rest of the marketing year to reach USDA’s target of 2.270 BB. Meanwhile, exports to China for the 2021-22 season are projected to fall 1.0 million tons. Weather may support the market a while longer, but eventually we will have to address ailing exports.
The outlook in wheat is slowly turning brighter as stocks are tightening. U.S. stockpiles at 665 MB are their lowest since 2013, but world stocks are still elevated at 291.7 million tons. Meanwhile, stocks-to-usage both, domestically and foreign, are tightening. In other developments, winter wheat harvest continues to progress slowly at 59 percent complete versus 65 percent for the average. Conditions of the spring crop were unchanged at 16 percent of the crop in good-to-excellent category. However, this is well below the rating of 68 percent a year ago. Export inspections last week were 15.5 MB and must average 17.1 MB to reach USDA’s target of 875 MB. Although the outlook in wheat is slowly turning more positive, it will continue to be a follower of corn and soybeans.
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