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Grain futures are being jerked around from the on again, off again threat of rain in the parched areas of the upper Midwest. Although light showers have developed recently, they are not enough to relieve the situation. Right now, the threat to corn is that extended periods of 90 plus degree heat can cause the reproductive process to shut down prematurely, adversely effecting production. This increases the chance for a bombshell in the August Crop Report. Last week, the rating for corn was down one-point to 64 percent of the crop in good-to-excellent condition. This compares to last year’s rating of 72 percent. According to Ag Watch’s yield model, this equates to a national yield of 167.0 bpa compared to 172.0 bpa a year ago. In other developments, export inspections last week were 40.8 MB with the pace of shipments showing their first uptick since mid-May. While weather will command traders’ attention a bit longer, keep in mind that it has a short shelf life.
The soybean crop continues to be plagued with hot, dry conditions in the upper Midwest, and may not see much relief until the second week of August. The question is, how much further will the crop deteriorate. Last week, the crop rating fell 2-points to 58 percent in the good-to-excellent category and compares to 72 percent a year ago and 62 percent for the 10-year average. According to Ag Watch’s yield model, the national yield is 47.3 bpa versus 50.2 bpa last year. In other developments, export inspections last week exceeded the previous week at 8.8 MB. While there was an uptick in the average pace of shipments, we have a way to go in reaching USDA’s target of 2.270 BB. Keep in mind that while the uncertainty in weather is supporting the market now, demand will be key once interest fades.
Problems persist with the spring wheat crop in the upper Midwest as the rating fell 2-points last week to 9 percent in the good-to-excellent category. The record low was a rating of 4 percent in good-to-excellent condition set in 1988. Meanwhile, winter wheat harvest is winding down at 84 percent done and should be wrapped up soon. Looking at exports, inspections last week were down slightly at 17.5 MB, but above the average needed to reach USDA’s projection of 875 MB.
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