On The Money Grain Commentary 7-23-20

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Corn Outlook:

The door is beginning to close for a summer weather event occurring in corn. Heat is forecast for the rest of the month, but so are isolated showers. Those hoping for a weather dominated market will have to wait for another time. As of last week, 69 percent of the corn crop was reported in good-to-excellent condition, unchanged from the previous week but 5 percent above the 10-year average. According to Ag Watch’s yield model, the national yield is 177.4 bpa compared to USDA’s estimate of 178.5 bpa. If weather is diminishing as a factor, demand will have to pick up the slack to bolster prices. However, export inspections last week were 45.2 MB and below the average needed to reach USDA’s target of 1.775 BB. Currently, the pace is on track for 1.650 BB. In short, there are bumps in the road for corn.

Bean Outlook:

While weather is being diminished in corn, it will be a factor for soybeans into August. Currently, 69 percent of the crop is rated in good-to-excellent condition, up one point from the previous week and 8 points above the 10-year average. According to Ag Watch’s yield model, the national yield is 50.7 bpa versus USDA’s estimate of 49.8 bpa. While a strong rating would suppress values in most cases, prices are being supported from purchases by China. While tensions exist between the U.S. and China, it has not deterred their need for soybeans. Meanwhile, export inspections were nominal last week at 16.6 MB and below the average needed to reach USDA’s target of 1.650 BB. Currently, the pace is on track for shipments of 1.650 BB.

Wheat Outlook:

The recent decline in wheat futures implies that production cuts in Europe and the Black Sea Region have been factored into values. Although their combined production decline is 2 million tons, exports are expected to fall by only one million tons. In the meantime, Ukraine and Russia continue to supply wheat to Egypt. Looking at U.S. exports, inspections last week were 18.3 MB and above the average to meet USDA’s target of 950 MB. However, the pace of shipments is running slightly below their projection. In other developments, harvest is 74 percent complete which is slightly below the average of 75 percent. The crop rating for spring wheat remained unchanged at 68 percent in good-to-excellent condition and compares to the rating of 76 percent a year ago.

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