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Weather as a factor in corn has largely passed as conditions have improved. However, was the advance that began in July justified, or did everyone jump the gun? The rally may have added to a long-term problem, namely demand. Here is why. When the bulls jumped on board, cumulative exports were 30 percent below a year ago, while shipments were running 9 percent less than the average needed to reach USDA’s target of 2.0 BB at that time. Today, cumulative exports are 33 percent below last year with shipments running 12 percent less than the average to achieve USDA’s current projection of 1.650 BB. That said, at what level do prices have to sink for demand to kick in? Not much help was offered this week as inspections were only 14.8 MB and well below the average of 66.0 MB that must be shipped weekly to meet USDA’s target.
August is a critical month for soybeans, but weather being a factor is slipping away as conditions are improving. Like corn, the advance in soybeans may have added to our demand problem. When the rally began in late May, cumulative exports were trailing the previous year by 2 percent, while shipments were running 5 percent less than the average needed to reach USDA’s target of 2.025 BB at that time. Today, cumulative exports are 7 percent behind last year with shipments running 4 percent below the level needed to meet USDA’s current projection of 1.980 BB. Furthermore, inspections at 10.3 MB offers little encouragement.
Hostilities between Russia and Ukraine in the Black Sea are increasing, but this seems to be turning into the norm. The U.S. might capture some export business, but it has not happened so far. Last week, export inspections were only 10.3 MB and must average 14.2 MB each week to meet USDA’s target of 725 MB, which is an historic low. Meanwhile, winter wheat harvest is winding down at 87 percent complete.
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