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Trading in the grains has been erratic this week from Russia’s announcement of backing out of the Black Sea grain agreement. Adding to the volatility are missile strikes launched by Russia against the port city of Odessa. This action puts a question mark on export prospects from Ukraine. Meanwhile, U.S. corn exports continue to languish. Inspections last week were only 14.3 MB and must average 45.2 MB weekly to meet USDA’s target of 1.650 BB. Currently, the pace is running 187 MB short of their projection. In other matters, crop conditions have improved the past 3 weeks with the rating rising 2 points to 57 percent in the good-to-excellent category last week. However, even with the improvement, expectations are the USDA will lower their yield estimate next month. The bottom line in corn is that an increase in exports, because of Russia’s aggression, is an absolute must if prices are to continue higher.
Soybeans are underpinned from hot temperatures forecast next week, and expectations that the USDA will lower their yield estimate next month even though the ratings have improved the past 2 weeks. Last week, the rating jumped 4 points to 55 percent of the crop in good-to-excellent condition. However, to keep prices moving higher, there is one key element missing, namely exports. Last week, inspections were a scant 5.7 MB and must average 20.9 MB to meet USDA’s projection of 1.980 BB. Currently, the pace is running nearly 100 MB short of their target. Meanwhile, an Amber Alert needs to be put out on China, as they have been missing since early May with their needs being met by Brazil’s record crop. The bottom line in soybeans is, weather concerns may underpin values a while longer, but once they pass, support will fall on the shoulders of exports.
Russia backing out of the Black Sea agreement, and the missile strike on the port of Odessa in Ukraine, could give U.S. exports a boost which is sorely needed as they are at an historic low. However, that may be wishful thinking as Russia is sporting record shipments. Last week, export inspections were 9.3 MB and below the average of 14.3 MB that must be shipped each week to achieve USDA’s target of 725 MB. Looking at harvest, it has passed the midway mark at 56 percent complete versus the average of 69 percent. Meanwhile, the rating for the spring crop improved 4 points last week to 51 percent in good-to-excellent condition. However, this is below the year ago rating of 71 percent. Like corn, the bottom line in wheat is that an increase in exports must materialize to sustain prices moving higher.
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