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Corn Outlook:
Intensity heightened this week in the Mideast when the U.S. conducted military strikes against radar and drone sites in Iran. Iran responded with attacks against U.S. installations in Kuwait, as well as their main airport. Normally, this would have lit a fire in the grains, but they tumbled instead. This is largely because the growing season has begun with the focus returning to fundamental factors and weather. Looking at corn, the first crop rating of the season shows 67 percent of the crop in good-to-excellent condition compared to 69 percent a year ago. According to Ag Watch’s yield model, the national yield is 184.6 bpa compared to 186.5 bpa a year ago and USDA’s current estimate of 183.0 bpa. Meanwhile, export inspections were above the previous week at 68.0 MB, but the pace has fallen 12.3 percent since mid-April. The bottom line in corn is stocks are abundant, weather is non-threatening for the next two weeks, and exports are slipping. Unless this changes, the upside price potential is probably limited for the moment.
Bean Outlook
Optimism regarding China making large purchases of U.S. soybeans appears to be fading as they have been silent about their intentions. Meanwhile, the index funds are long a record 1.265 BB and look to be liquidating, which is feeding this week’s sell-off. In the meantime, planting is winding down at 87 percent complete compared to 83 percent a year ago and 80 percent for the average. The first crop rating of the season shows 66 percent of the crop in good-to-excellent condition compared to 67 percent a year ago. According to Ag Watch’s yield model, this equates to a national yield of 52.4 bpa compared to 53.0 bpa a year ago and USDA’s current estimate of 53.0 bpa. Looking at exports, inspections last week were slightly below the previous week at 18.1 BB. The bottom line in soybeans, is that stocks are abundant, Brazil has a record crop, and a lot of hope has been riding on China.
Wheat Outlook:
Global stocks of wheat are declining, but the market cannot seem to find any traction as harvest is beginning, and the U.S. is the most expensive source on the planet. The funds are heavily short but have little incentive to lighten their position. Meanwhile, export inspections last week were 14.7 MB with cumulative totals for the season of 877 MB, just short of USDA’s target of 900 MB. The bottom line in wheat is it needs a bullish stimulus but cannot find one.
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