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The bulls do not seem overly enthused about the hot, dry forecast for the rest of the month as the Pro Farmer crop tour is showing better than expected results with yields above a year ago. If weather as a factor has passed, the focus will turn to demand, and planting of South America’s crop that begins late next month. Right now, demand is a concern, as Brazil is gaining prominence as an exporter of corn, while U.S. exports are lagging. Last week, inspections were only 18.9 MB. Meanwhile, cattle numbers are 2 percent below a year ago, and placements 8 percent. The bottom line in corn is that the USDA forecasts corn exports for 2023-24 at 2.050 BB, and they will have to hit the ground running for their target to be met when the marketing year begins in September.
The last dance may be playing for weather in soybeans. When the music stops, fact checking presents a few hurdles for the bulls. One is China’s economy is contracting which means they may import fewer soybeans. The USDA reduced their imports by 1.0 million tons in an earlier report, and they might be lowered again. China is also financing the building of infrastructure in South America which means they will source them more for ag products. Another issue is our exports are struggling. Last week, inspections were only 11.6 MB. For the past few weeks, they have been averaging around 10 MB. When the new marketing season begins next month, we need to see weekly exports of at least 30-35 MB. If that does not materialize, the market faces some serious problems.
Wheat continues to struggle but that is nothing new. Pressure has arisen recently from reports that there may be a deal implemented next month for insuring vessels navigating between Black Sea ports. However, Russia’s recent attack on the port city of Odessa may present an obstacle. Meanwhile, exports are faltering with inspections last week at 11.6 MB. They must average 13.8 MB on a weekly basis to meet USDA’s projection of 700 MB, which is an historic low. In other matters, winter wheat harvest is essentially done, while the harvest of spring wheat is 39 percent complete compared to 31 percent but is behind the average of 46 percent.
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