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July has a history of volatility in the grains, and this month has certainly lived up to that reputation. Corn has been caught in a crossfire between concerns of inflation that leads to a recession, dollar strength, and Mother Nature who has not been very cooperative. During the past four weeks, the rating for corn has deteriorated but stabilized last week at 64 percent of the crop in good-to-excellent condition. However, conditions may continue to decline as the forecast for the remainder of July is for above normal temperatures accompanied with limited moisture. According to Ag Watch’s yield model, the national yield is 175.2 bpa versus USDA’s estimate of 177.0 bpa. Looking at exports, inspections last week were uninspiring at 36.7 MB. Since early April, the pace of shipments has fallen 33 percent. This is largely because the dollar is at a twenty-year high. With uncertainty surrounding the economy, the consumer price index at 9.1 percent, and expectations for additional rate hikes by the Fed, weather may have to carry the ball for corn to move higher.
Soybeans are in the crucial period of development as they are in the bloom and pod setting stage. That said, weather will be important for the remainder of the month and into August as stocks are shrinking. However, the crop may not get what it needs because of the forecast mentioned in the corn comments. Last week, the crop rating fell one-point to 62 percent in good-to-excellent condition. According to Ag Watch’s yield model, this equates to a national yield of 51.4 bpa which is just below USDA’s estimate of 51.5 bpa. In other developments, export inspections were disappointing last week at 13.1 MB. They are projected at 2.170 BB but are on track for reaching 2.035 BB. Meanwhile, since May, China has been barely visible. Like corn, there are concerns about the economy and weather will have to step up for soybeans to move higher.
Wheat has been put through the wringer because of the dollar being at its highest point since September 2002. Last week, export inspections were a modest 11.3 MB and are going to have to pick up the pace to reach USDA’s target of 800 MB. Looking at winter wheat harvest, it has progressed to 63 percent complete which is just above the average of 61 percent. The spring wheat crop is improving with the rating up 4 points last week to 70 percent in good-to-excellent condition. The bottom line in wheat is that there must be a break in the dollar if the U.S. is going to be competitive.
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