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The bulls’ horns have drooped. Currently, the rally in corn is showing some stress fractures for these reasons. First, the increase in values could draw an additional 2 million acres being planted. If so, ending stocks this fall may total 1.8-2.0 BB rather than USDA’s current estimate of 1.5 BB. Second, while ethanol consumption for 2021-22 is projected to rise 225 MB, exports are forecast to decline 325 MB with total usage falling 105 MB. In the meantime, exports from Argentina, Brazil, and Ukraine are projected to rise 17.5 million tons. Long story short, the U.S. will face plenty of competition. Looking at exports, inspections last week were strong at 74.4 MB with China taking the most shipments. However, the pace of shipments to them has fallen 5.6 percent since peaking a couple of weeks ago. In other developments, planting is rolling along at 80 percent done versus the average of 68 percent.
Soybeans have come under pressure recently, but the bulls have not abandoned ship yet because of tight stocks. Weather is on everyone’s radar, but no threats are on the horizon through early June. However, that could change later next month or in July. Planting is progressing at an extraordinary pace at 61 percent done versus the average of 37 percent. With beneficial weather forecast the next couple of weeks, we will probably see a few extra acres planted. Even though stocks are tight, there are a few issues that are possibly being overlooked. One is that exports are forecast to decline 205 MB from a year ago with usage falling 155 MB. The fly in the ointment is that although China’s imports are projected to rise 3.0 million tons, Brazil has harvested a record crop, and their exports are expected to jump 7.0 million tons. This would be a record for them. It does not take many brain cells rubbing to figure where this might be headed! Meanwhile, export inspections last week at 11.3 MB were a 4-week high. However, shipments to China were barely visible. While it almost went unnoticed, the pace of shipments last week rose for the first time in 15 weeks.
There is little happening in wheat. The rating for the winter crop fell one-point last week to 48 percent in good-to-excellent condition and compares the rating of 52 percent a year ago. Planting of the spring crop is wrapping up quickly at 85 percent complete versus the average of 71 percent. Looking at exports, there is not much to be said. Inspections last week were up slightly at 24.1 MB. With only 3 weeks left in the marketing year, it will be a photo finish as to whether we will reach USDA’s target of 965 MB.
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