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The grains have a lot on their plate as the crop continues to deteriorate, while there is upheaval within the Russian government. Last week, the rating for corn fell 5 points to 50 percent of the crop in good-to-excellent condition. Normally, this would send the market skyrocketing, but it did not even raise an eyebrow. This suggests that weather concerns have run their course. Meanwhile, there was an aborted coup attempt last weekend by a paramilitary group in Russia to oust Putin. This puts the Black Sea Accord into question, as well as Russia’s exports. In the meantime, corn exports are suffering with inspections last week their lowest level since February at 21.3 MB. This is well below the average of 44.6 MB that must be shipped weekly to reach USDA’s target of 1.725 BB. Since the first of the month, shipments have fallen 19.1 percent. Bottom line–if weather concerns are fading, what is the prospect of the existing export pace offering support?
The crop rating for soybeans fell 3 points last week to 51 percent in good-to-excellent condition. Normally, this would thrill the bulls, but they did not even yawn. Wetter conditions are forecast for next week, which suggests that the obsession with weather has probably passed. If so, exports will have to shoulder the load for prices to move higher. However, that might be wishful thinking. Last week, inspections were only 5.1 MB, the second lowest of the season. They must average 19.3 MB each week to reach USDA’s projection of 2.0 MB. We have not seen a shipment that high since mid-April. Furthermore, China, our largest customer, is virtually non-existent as they are securing their needs from Brazil. They have not purchased over 1.0 MB from us since early May. Bottom line is, exports have diminished, the funds are long 220 MB, and the market is sputtering.
Wheat faced a sharp decline this week along with corn and soybeans. Hopes are that the increased tensions regarding the attempted coup against the Russian might swing some business to the U.S. as exports are at an historic low. However, that may not occur as Russia has ample stocks that is offering competition. That can be seen from inspections last week at a marketing year low of 7.4 MB. In other developments, harvest is creeping along at 24 percent complete, which is well below the pace of 39 percent a year ago and 33 percent for the average.
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