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Supply remains the key concern in corn as there are too many unanswered questions regarding planted acres and yield. It could be August before we find out how bad the situation really is. As we go through the discovery process, volatility and emotions will be stretched to an extreme. Last week, the rating for corn fell 3 points to 56 percent in good-to-excellent condition. Ohio’s rating slid the most by 14 points. According to Ag Watch’s yield model, the national yield stands at 158.4 bpa compared to USDA’s current estimate of 166.0 bpa. Looking at exports, inspections last week were a meager 24.3 MB and must average 56.7 MB each week to reach USDA’s target of 2.2 BB. Since late April, the pace has fallen 42 percent. Once production concerns have run their course, demand will have a target drawn on its back.
While concerns of late planting has centered around corn, soybeans are having issues as well. Progress is crawling at a snail’s pace and is 85 percent done compared to the average of 97 percent. The first crop rating for the season has 54 percent of the crop in good-to-excellent condition. According to Ag Watch’s yield model, this translates in a national yield of 47.2 bpa versus USDA’s estimate of 49.5 bpa. The anticipated decline in production, along with fund short covering, have been the factors underpinning the market. However, even with a decline in production, global stocks will remain at hefty levels. Looking at exports, inspections were lackluster last week at 25.0 MB. They must average 36.5 MB each week to reach USDA’s projection of 1.7 BB. Meanwhile, there was a bright spot in that China took 19.4 MB, their largest shipment since late February.
Wheat is garnering support from the heat wave affecting the crop in Europe, and the slow harvest progress that is 15 percent done compared to the average of 34 percent. In addition, recent heavy rain and hail in the Plains is creating quality concerns. Looking at exports, they are off to a slow start for the marketing year with inspections last week a modest 14.9 MB. While wheat is becoming an alternative to corn in livestock feeding, the U.S.’s lagging share of global exports will continue to be a factor.
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