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It may be a long fall and winter for the bulls in corn. Ending stocks of 2.2 BB are the third largest on record. Meanwhile, the crop ratings have risen 5 out of the past 7 weeks and are above a year ago. USDA’s yield estimate of 175.1 bpa is the fourth highest on record and is in line with Ag Watch’s yield model of 175.0 bpa. Furthermore, consumption has been lowered 95 MB while exports are down 50 MB. Last week, inspections were only 15.6 MB. The bottom line is that corn faces an uphill struggle, and a weather event will probably be needed in South America to bring the bulls back to the trough. However, this may be a while as we are several weeks away before planting begins in Argentina and Brazil.
The bulls have been focused on weather for most of the growing season, but that will soon pass. When it does, demand will be key. That poses a problem, as Brazil is forecast to plant a record crop, in addition to record exports. Meanwhile, U.S. exports are projected to decline for the third consecutive year. Inspections last week were only 10.9 MB, which does not offer much encouragement. In the meantime, China’s economy is contracting which raises concerns regarding their imports. Currently, their soybean imports are projected to fall 1.0 million tons from a year ago. What must be seen, when the new marketing year begins in September, is for exports to average at least 30.0 MB on a weekly basis by no later than early October. If that does not happen, then we are facing a serious problem.
It is difficult to find any encouraging developments in wheat. The unrest between Russia and Ukraine in the Black Sea Region seems to have become the norm. Meanwhile, Russia is forecast to have record exports, while the USDA has lowered U.S. exports to an historic low of 700 MB. Last week, inspections were a marketing year low of 6.7 MB and must average 13.8 MB each week to meet USDA’s projection. In other developments, winter wheat harvest is winding down at 92 percent done, while harvest of the spring crop is beginning and 24 percent complete.
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