On The Money Grain Commentary 6-15-23

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Corn Outlook:

Weather continues to hold a strong grip on the corn market with traders closely scrutinizing every forecast. This is typically the norm through early-mid July. Last week, the crop rating fell 3 points to 61 percent in good-to-excellent condition and compares to 71 percent a year ago. While Mother Nature is always in the spotlight, the decline in U.S. exports is also a concern as they were lowered 50 MB in the last crop report. Inspections last week were 46.0 MB and, provided shipments maintain a weekly pace of 41.7 MB, are on track to meet USDA’s target of 1.725 BB. However, what is distressing is that the U.S. share of global exports has fallen to 26.9 percent from 30.3 percent a year ago. Keep in mind that demand is key to prolonged price strength.

Bean Outlook

The focus in soybeans, right now, is mostly on weather and crop conditions. Last week, the crop rating fell 3 points to 59 percent in good-to-excellent condition and compares to the rating of 70 percent a year ago. The current bullishness in weather might be getting ahead of itself and is overshadowing the decline in exports. In the latest crop report, the USDA lowered their estimate by 15 MB. Last week, inspections were a marketing year low of 5.1 MB and must average 17.1 MB on a weekly basis to reach USDA’s projection of 2.0 BB. An export number of that size has not been seen since mid-April. Meanwhile, shipments to China are nearly non-existent. Shipments to them exceeding 1.0 MB have not been seen since early May. The bottom line in soybeans is that while weather is in the spotlight now, once it passes, we must face the fact that U.S. exports have been declining since 2020 while those of Brazil have risen to a record.

Wheat Outlook:

While corn and soybeans have risen on weather concerns, wheat has mostly been a spectator. This is largely because the conflict between Ukraine and Russia seems to be losing its influence. Also, Russia is projected to export a record crop, and winter wheat harvest is beginning in the U.S. As of last week, 8 percent of the crop had been harvested, which is slightly below the average of 9 percent. Meanwhile, exports for the new marketing year are off to a slow start with inspections last week at 9.0 MB. Looking at spring wheat, it is mostly planted with 60 percent of the crop rated in good-to-excellent condition compared to 54 percent a year ago.

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