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Corn Outlook:
A lot has gone on the grains this week with the crop report, and the mutual agreement between the U.S. and China to lower tariffs for 90 days during their negotiations. While the postponement of tariffs offers optimism, it is only a bird in the bush, not one in the hand. Looking at corn, USDA’s ending stocks estimate of 1.8 BB for 2025-26 was lower than expected but is the largest since 2019. This may act as a headwind unless Mother Nature becomes a factor during the growing season. A positive note is that world stocks continue to decline, reaching a 12-year low, and exports are rising. However, last week, inspections were 48.1 MB, the smallest since late February. While Mexico is our largest customer, exports to them for the 2025-26 are forecast to remain unchanged, but will be slightly higher for Japan, our second largest buyer. The bottom line is, unless Mother Nature has temper tantrum later this summer, or the negotiations with China result in increased exports of corn, price gains may be limited.
Bean Outlook
Soybeans were on a roll earlier this week on optimism that trade negotiations with China will result in greater exports to them. However, as mentioned in a previous comment, they have invested billions in Brazil’s infrastructure over the past decade, meaning that we should not become overly confident. Last week, export inspections were 15.6 MB with China being a no show. If the export pace continues to dwindle, it will be a tight race in meeting USDA’s target of 1.850 BB. In other matters, ending stocks for 2025-26 have been lowered to 295 MB, but global stocks are forecast at a record 124.3 million tons. Meanwhile, U.S. exports for the new crop year are projected to decline 35 MB to 1.815 BB, but those from Brazil are forecast to rise 7.5 million tons to 112.0 million. The bottom line is, while there is hope that negotiations with China will result in increased purchases from them, we need to see it happen for the market to sustain further gains.
Wheat Outlook:
Wheat has recently found support in light of the USDA’s forecast of 2025-26 ending stocks at 923 MB, the highest since 2019. Meanwhile, crop conditions are improving with 54 percent of the crop rated in the good-to-excellent category last week, a 3 percent improvement from the previous week. Looking at exports, inspections slipped to 14.8 MB and are in a tough race to meet USDA’s projection of 820 MB. The bottom line in wheat is that the fundamentals are not overwhelmingly supportive, but the funds are short 520 MB and may begin to cover.
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