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Corn planting is getting underway which means the focus is on the new crop and weather. If one uses USDA’s recent ending stocks estimate of 1.352 BB for beginning stocks of the 2021-22 crop season, planted acres of 90.8 million, the yield estimate from the Ag Outlook Forum of 179.5 bpa, ending stocks this fall could decline to 1.215 BB. However, if last year’s yield of 172.0 bpa is realized, ending stocks would only be 510 BB. This potential tightness is the red blanket flapping in front of the bulls. In other developments, export inspections were down from the previous week at 62.3 MB but remain solid. Meanwhile, there is a yellow flag waving that needs to be watched, namely the pace of shipments fell for the first time since the first week of November. This may be only an aberration, but it could also be the beginning of a trend.
Soybean exports are deteriorating but prices are underpinned from tight stocks. Last week, inspections were 12.0 MB, and below the average needed to reach USDA’s projection of 2.280 BB. This was the second week in a row that has happened. Since November, the pace of shipments has fallen nearly 84 percent. Meanwhile, looking at potential stocks this fall, if one uses USDA’s ending stocks estimate of 120 MB for beginning stocks of the 2021-22 crop season, planted acres of 87.6 million, the Ag Outlook Forum yield projection of 50.8 bpa, ending stocks this fall could be a minus 10 MB. While this is not going to happen, it keeps the flame burning for the bulls. In other developments, Brazil’s harvest is 85 percent complete which means China will source them for their needs rather than the U.S. This is reflected in the latest supply-demand report where the USDA projects Brazil’s exports rising 1.0 million tons.
Wheat continues to mirror the price direction of corn and soybeans. Last week, there was no change in the crop condition of winter wheat with it rated 53 percent in the good-to-excellent category and compares to the rating of 62 percent a year ago. Meanwhile, spring wheat planting is moving along at 11 percent done versus the average of 6 percent. There is not much to be said about exports as inspections last week at 16.8 MB were below the average of 24.8 MB that must be shipped each week to reach USDA’s target of 985 MB. Right now, there are two bright spots in wheat. One is that world stocks have seen a downtick, while the other is China feeding more wheat reducing their stocks 5.0 million tons.
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