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Corn Outlook:
Ideas that USDA’s yield estimate of 180.7 bpa is too high, and strong exports are the factors rallying corn. The recent Pro Farmer crop tour projects a yield of 174.2 bpa which boosted prices this week. Since the end of last month, the crop rating has declined 6 points, meaning USDA’s current estimate is too high and will probably be lowered in the September report. Looking at exports, inspections last week fell below the previous week to 51.0 MB. Although U.S. fob prices are higher than South America, expectations are exports will remain strong when the new marketing season begins in September. While the bulls are currently holding the upper hand, be aware that the short position of commercial traders has risen beyond 2.0 BB. When that happened in the past and prices peaked, they fell on average 13-16 percent with the max being 32 percent. The bottom line–a bull must be constantly fed.
Bean Outlook
Soybeans struggled early this week from Pro Farmers crop tour yield estimate of 53.3 bpa which is above USDA at 52.7 bpa. However, they recovered as recent sales to China continues to boost optimism of them fulfilling the agreement to purchase 25 million tons from last fall’s meeting between President Trump and Xi. Their current commitments are 6.8 million tons. Another meeting is scheduled for late next month which will capture a lot of interest. As mentioned in previous comments, the mid-term elections could have a bearing upon whether China fulfills the agreement. Currently, the polymarket betting odds have risen to 88 percent that the Democrats will take the House and fallen to 50 percent the Republicans retaining the Senate. If the Democrats win both houses, President Trump’s leverage in negotiating with our trading partners will be greatly weakened.
Wheat Outlook:
The ongoing conflict Ukraine-Russia conflict, which has disrupted grain shipments in the Black Sea, continues to escalate and is supporting wheat. As of this moment, no end is in sight. Looking at exports, inspections last week were 15.6 MB and above the average of 15.3 MB needed to be shipped weekly to meet USDA’s target of 775 MB. The spring wheat harvest is progressing swiftly at 62 percent complete compared to 51 percent a year ago and 52 percent for the average.
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