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Mother Nature has been generous to corn producers this season blessing them with near ideal conditions. Currently, the forecast shows that benign weather will persist through the first week of July. This is disappointing to grain traders that were banking on a weather market, as the crop could skate through pollination without a mishap. Last week, the crop rating rose one point to 72 percent in good-to-excellent condition. According to Ag Watch’s yield model, this translates to a national yield of 180.8 bpa versus USDA’s estimate of 178.5 bpa. Looking at exports, they saw an uptick last week with inspections of 51.0 MB, the highest since early May. However, shipments still lag the pace needed to reach USDA’s target of 1.775 BB. Although the funds are sporting a hefty short position of 1.550 BB, a catalyst is lacking to force them to cover.
Soybeans are torn between favorable growing conditions, the increase in Coved-19 cases, and optimism for additional purchases by China. Last week, the crop rating fell 2 points to 70 percent in good-to-excellent condition but is well above last year’s rating of 54 percent. According to Ag Watch’s yield model, this equates to a national yield of 50.7 bpa compared to USDA’s current estimate of 49.8 bpa. Although China has been an active buyer the past few weeks, their interest has been mostly for new crop. Inspections last week were meager at 9.3 MB, well below the average of 30.9 MB that must be shipped each week to achieve USDA’s projection of 1.650 BB. While the fundamentals are improving for soybeans, the upside potential will be limited unless weather takes a stark turn for the worse.
Wheat is meeting a headwind from harvest and lack of competitiveness in the global market. As of last week, harvest was 29 percent complete compared to 26 percent for the average. Yields in areas of the east are disappointing as the crop was nipped earlier in the season from frigid temperatures. Looking at the rating for spring wheat, it fell 6 points last week to 75 percent in good-to-excellent condition. Export inspections last week were encouraging at 22.5 MB, the highest seen since early April. The fund short position is growing at 250 MB but has not reached a level of concern. That said, we will probably not see them cover until harvest is closer to completion.
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