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Corn Outlook:
A fire was lit in the grains early this week from news of China’s intent to purchase $17 billion of ag goods in each of the next 3 years, in addition to 25 million tons of soybeans. Expectations are corn will be included in the purchases. If it materializes, it will give exports a boost, which has been exemplary for the marketing year. Meanwhile, inspections last week were disappointing at 54.2 MB, the lowest since early February. This is below the average of 66.2 MB that must be shipped weekly to meet USDA’s projection of 3.3 BB. The pace has fallen 7.3 percent since mid-April but is still on track to achieve their target. In other developments, planting is in the final stretch at 76 percent complete, par with a year ago, but ahead of the average of 70 percent. The bottom line in corn is that positive news appears to be factored into values for now, and the crop is off to a good start which may limit gains.
Bean Outlook
Soybean futures soared early this week from news of China agreeing to purchase $17 billion of ag goods over the next 3 years, as well as 25 million tons of soybeans. However, so far, the agreement is only a handshake between President Trump and Xi of China, not a written one. Furthermore, China has a history of not fulfilling their agreements. If they honor this one, there may not be any purchases until August as Brazil’s crop is currently available for export. Meanwhile, export inspections last week were disappointing at 17.7 MB with the pace having fallen 59.6 percent since early April. Planting is making great strides at 67 percent complete, compared to 63 percent a year ago and 53 percent for the average. The bottom line in soybeans is that bullish sentiment has reached an extreme, as the index funds are holding a record long position of 1.115 BB. That said, for further gains, verification needs to be seen soon of China making a commitment.
Wheat Outlook:
The rating of the winter wheat crop fell one-point last week to 28 percent in good-to-excellent condition, but it is getting late in the game for being a factor as harvest is quickly approaching. The supportive influence for the market is that global stocks are on the downward swing. Meanwhile, exports remain lethargic with inspections last week of only 8.2 MB. Cumulative exports for the season are 848 MB and running short of USDA’s target at 900 MB.
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