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When the calendar page turns to June, weather becomes the most discussed topic in the grains. We got a glimpse of that with last week’s rally. However, a greater concern is the proposed debt ceiling bill. It could raise the debt-to-GDP ratio to 132.5 percent from the current level of 120.4 percent which is unmanageable. This will keep interest rates elevated, increase taxes, stifle demand, and threaten the dollar as the world reserve currency. Keep in mind that China is nipping at our heals to displace the dollar with the yuan. Looking at corn, exports have blossomed recently with inspections last week at 51.7 MB, the third highest of the season. To meet USDA’s target of 1.775 BB, we must ship 46.1 MB each week, which could be a challenge. In other developments, planting is wrapping up at 92 percent complete with 69 percent of the crop rated in good-to-excellent condition. This compares to last year’s rating of 73 percent.
Soybeans have taken a shellacking the past several weeks as Brazil is sporting a record crop, and exports have all but dried up. However, the market is attempting to recover from its oversold condition. Last week, export inspections were 8.8 MB and must average 16.7 MB on a weekly basis to reach USDA’s target of 2.015 BB. We have not seen shipments of 16.0 MB since mid-April. Shipments to China have tumbled and are down 98.8 percent since November. Meanwhile, Brazil’s shipments to China are rising. In other matters, planting is winding down at 83 percent compared to 64 percent a year ago and 85 percent for the average. The bottom line in soybeans is that without China’s business, or adverse growing conditions developing, price recoveries will be limited.
Falling prices in Russia, along with their rising exports, has kept U.S. wheat in a race to the bottom. However, prices are attempting to recover as Russia is obstructing inspections of shipments from the Black Sea Region. Last week, inspections were slightly above the previous week at 14.0 MB and are on track to reach USDA’s target of 725 MB. However, this is an historic low. Last week, the rating for winter wheat improved 3 points to 34 percent of the crop in good-to-excellent condition and compares to last year’s rating of 29 percent. Improving weather in the upper Midwest allowed spring wheat planting to progress to the 85 percent mark versus 70 percent a year ago and 86 percent for the average.
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