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Now that a bullish acreage report is behind us, traders will focus on weather and the crop ratings to put the pieces of the supply puzzle together. Last week, the rating slipped one-point to 64 percent of the crop in good-to-excellent condition. This compares to a rating of 73 percent a year ago and the 10-year average of 68 percent. According to Ag Watch’s yield model, this equates to a national yield of 165.5 bpa versus 172.0 bpa a year ago. Looking at exports, inspections last week were disappointing at 39.5 MB, the lowest since January. A point of concern is that since mid-May, the pace of shipments has fall nearly 22 percent. In addition, there has been a downtick in shipments to China. While the bulls are focused on weather and supply right now, the slippage in exports may become a fly in the ointment down the road.
Following the friendly acreage report this week, traders will scrutinize every weather forecast with a fine-toothed comb. While most of the Midwest is expected to see normal to above normal moisture through mid-month, the northern sections will stay hot and dry. With stocks that are already tight, and ratings that are slipping, the market will likely maintain a weather premium. Last week, the rating for soybeans stood unchanged at 60 percent of the crop in good-to-excellent condition. This compares to the rating of 71 percent a year ago and 65 percent for the 10-year average. According to Ag Watch’s yield model, this translates to a national yield of 47.8 bpa versus 50.2 bpa last year. Looking at exports, they remain a sore spot. Inspections last week were a marketing year low of 3.8 MB. Since peaking last November, the pace of shipments has declined 93 percent. If stocks were not tight, and weather still a big unknown, values would not be at their current level.
Winter wheat harvest is plodding along at 33 percent done compared to the average of 40 percent. The factor supporting the market is the deplorable condition of the spring crop. Last week, the rating fell 7-points to 20 percent of the crop in good-to-excellent condition. This compares to the last year’s rating and the 10-year average of 69 percent. Looking at exports, they have gotten off to a slow start this season with inspections last week only 10.4 MB, a marketing year low. Right now, exports are on track for 820 MB versus USDA’s target of 900 MB.
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