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The ink was not even dry on the Russia-Ukraine agreement, which would have allowed shipments of grain out of Ukraine, when the Russian military attacked the port of Odessa. Their action keeps the Black Sea Region as a supplier in limbo and was the influence behind corn’s rally early this week. In the meantime, the crop is deteriorating. Last week, the rating fell 3 points to 61 percent of the crop in good-to-excellent condition and is below the 10-year average of 64 percent. USDA’s current yield estimate is 177.0 bpa. However, Ag Watch’s yield model shows the yield closer to 171.7 bpa. While the decline in the rating and increased tension between Russia and Ukraine are supportive, exports are disappointing. Last week, inspections were only 28.5 MB with the pace of shipments down 43.5 percent from their peak in April. The bottom line in corn is that while there are positive market influences for the moment, the overriding factor may be the strong dollar and a looming recession, possibly worse.
Soybeans are finding support from the forecast for above normal temperatures and below normal moisture through August 10th. With stocks shrinking, there is little wiggle room for adverse weather. Last week, the rating for soybeans fell 2 points to 59 percent of the crop in good-to-excellent condition. This compares to the 10-year average of 61 percent. USDA’s current yield estimate is 51.5 bpa while Ag Watch’s yield model shows it at 51.4 bpa. Looking at exports, inspections last week were lean at 14.2 MB with China mostly a no show. Keep in mind that once weather passes as a factor in soybeans, demand will have to pick up the pace to sustain further price gains.
Wheat got a much-needed lift early this week because of Russia’s increased aggression in Ukraine. While this could lead to increased U.S. exports, they have struggled because of the high dollar. Meanwhile, inspections last week were inspiring at 17.4 MB, a marketing year high. They must average 16.0 MB each week to reach USDA’s target of 800 MB. In other developments, winter wheat harvest is in its final stretch at 77 percent complete, just below the average of 80 percent. The rating for the spring crop fell 3 points last week to 68 percent in good-to-excellent condition which offered support.
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