On The Money Grain Commentary 7-9-20

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Corn Outlook:

Traders have patiently waited for a weather market and are keeping tabs on a hot, dry forecast over the next couple of weeks that could stress the corn crop. However, with a crop rating of 71 percent in good-to-excellent condition, 4 points above the 10-year average, and ending stocks that are more than adequate, the situation is certainly not dire. According to Ag Watch’s yield model, the national yield is 179.1 bpa versus USDA’s estimate of 178.5 bpa. Meanwhile, the funds have begun to cover their massive short position and additional short covering could underpin prices. In other developments, export inspections last week were 37.8 MB and below the average needed to reach USDA’s target of 1.775 BB. China bought corn this week which offers a glimmer of hope.

Bean Outlook:

China has become more active recently with purchases of old and new crop soybeans. For a while, their interest was mostly new crop. This has given exports a boost with inspections last week 19.1 MB, the highest seen since early May. However, this is still below the average of 34.7 MB that must be shipped each week to reach USDA’s projection of 1.650 BB. A hot, dry weather pattern in the forecast for the next couple of weeks is drawing some attention and may weigh on the crop rating that currently stands at 71 percent in good-to-excellent condition. This may trim yields somewhat, but the crop is ahead of pace in development and the upside potential could be limited. According to Ag Watch’s yield model, the national yield is 51.6 bpa compared to USDA’s estimate of 49.8 bpa. Right now, the funds have a modest long position and may add to it.

Wheat Outlook:

Declining production in France and the Black Sea Region uplifted wheat this week causing the funds to cover shorts. In other developments, harvest is 56 percent complete which is on par with the average of 55 percent. The rating for the spring crop improved one point to 70 percent in good-to-excellent condition but is down 8 percent from a year ago. Export inspections were disappointing last week at 11.9 MB, a marketing year low. Currently, Russia continues to be the cheapest source on the global market.

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