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Volatility in corn is on the upswing as we are in the most critical phase of the growing season. It seems like every crop rating report and weather forecast triggers a knee jerk reaction making 30-40 cent price swings common each day. Last week, the rating fell 3-points to 65 percent of the crop in good-to-excellent condition. This compares to the rating of 72 percent a year ago, and 69 percent for the 10-year average. According to Ag Watch’s yield model, this equates to a national yield of 167.0 bpa versus 172.0 bpa a year ago. Meanwhile, exports to China remain strong and have risen for the past 5 weeks. Inspections last week were 58.3 MB with China taking 55 percent of the shipments. However, the overall pace of shipments is falling and down 15.6 percent from a few weeks ago. This reflects values having reached a level that is causing our traditional customers to back away.
Soybeans have also seen a surge in volatility for the same reasons mentioned in corn. Price swings of 40-60 cents are not uncommon. The reason for the wide range is caused by an increase in algorithmic trading systems. In other developments, the rating for soybeans fell 2-points last week to 60 percent of the crop in good-to-excellent condition. This compares to last year’s rating of 70 percent and the 10-year average of 68 percent. According to Ag Watch’s yield model, this equates to a national yield of 48.2 bpa compared to 50.2 bpa a year ago. Looking at exports, there is not much to say. Inspections last week were 6.4 MB with China barely a heartbeat. Since November, the pace of shipments has fallen 92 percent. Tight stocks and the critical growing season ahead are the factors offering support.
Wheat harvest is off to a slow start at 17 percent complete versus the average of 26 percent. This may be offering some support, but the decline in the condition of the spring crop is underpinning more. Last week, the rating of the spring crop fell 10-points to 27 percent in good-to-excellent condition. Last year’s rating was 75 percent with the 10-year average at 71 percent. In other developments, export inspections last week were a marketing year high of 20.1 MB.
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