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Corn futures are trapped in a crossfire between the U.S.-China mudslinging, a new trade deal with Japan, a crop several weeks behind in maturity, questions regarding yield potential, harvested acres, and sagging exports. Answers will come in time. Meanwhile, the crop rating for corn rose two-points last week to 57 percent in good-to-excellent condition. According to Ag Watch’s yield model this equates to a national yield of 167.7 bpa versus USDA’s estimate of 169.5 bpa. The crop is well behind in development with Illinois, Indiana, Iowa, Minnesota, Missouri, Ohio, and South Dakota lagging their average dent stage by 25-39 percent. This could cause issues even with a normal frost date. Looking at exports, inspections last week were 25.1 MB with cumulative shipments for the season at 1.842 BB which is well behind USDA’s projection of 2.1 BB.
Soybeans are facing the same problems as corn, maybe more so. China is our largest buyer of soybeans but has turned to South America for their primary supplier. That trend is unlikely to be changed. Lost potential will have to be made up with increased sales to the European Union, Japan, Southeast Asia, and Mexico. Last week, export inspections were 35.3 MB with cumulative shipments for the season at 1.633 BB. It will be a photo finish in reaching USDA’s target of 1.7 BB. China took 22.5 MB in shipments last week and has averaged taking 12.5 MB since January. Before the trade dispute began, they were receiving 15-30 MB on a weekly basis. However, shipments averaging 12.5 MB may be the new norm. Looking at the crop rating, it improved one-point last week to 55 percent in good-to-excellent condition. According to Ag Watch’s yield model, this translated to a national yield of 49.0 bpa versus USDA’s estimate of 48.5 bpa. The crop is behind in development with Illinois, Indiana, Ohio, and South Dakota most likely to get clipped even with a normal frost date.
Fresh news in wheat is limited but the export pace has risen 35 percent since posting a low in early August. Last week, inspections were 18.1 MB and are on track for reaching USDA’s target of 975 MB. However, we still have a long way to go in the season and must keep in mind that U.S. wheat remains priced above the Black Sea Region. Meanwhile, spring wheat harvest is off to a slow start at 16 percent complete versus the average of 49 percent. In a few weeks, the question will arise as to whether there is enough incentive to plant at the current price level.
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Comments and suggestions are provided for information purposes only. Information contained herein is obtained from sources believed to be reliable but not guaranteed to its accuracy or completeness. Readers using the information contained herein are responsible for their own actions. No presentations can be made that recommendations will be profitable or that they will not result in losses. This information is neither an offer to sell nor solicitation to buy of the commodity futures mentioned herein. The writer may be trading in the commodities mentioned.