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The snorting and bellowing from the bulls over the past several weeks has turned into a squeal, as the forecast for moderate weather through mid-August has driven the grains lower. That said, if the final weather card has been played, demand will have to carry the load. This will not be easy, as demand is struggling in the grains which is evident from railcar loadings that are down 11.1 percent from a year ago. Looking at corn, export inspections last week were above the previous week at 20.5 MB, but less than the average of 55.9 MB that must be shipped weekly to reach USDA’s target of 1.650 BB. Currently, the pace is running 205 MB below the level needed. The bottom line in corn is that input is presently lacking to flag the bull’s attention. However, that may change later this fall as Brazil is expected to plant fewer acres.
The weather is mostly non-threatening through mid-August, but any yield improvement in soybeans may only be modest. Supply remains a question, but demand could be a bigger one as China’s imports are projected to decline, while an increase is expected in Brazil’s plantings this fall. As mentioned in a previous comment, China is financing the building of infrastructure in Argentina, Brazil, Chile, and Venezuela which suggests that they will source South America for more of their ag needs in the future. Meanwhile, U.S. exports remain on the ropes as inspections last week were 12.1 MB and well below the average of 24.8 MB that must be shipped weekly to achieve USDA’s projection of 1.980 BB. Currently, the pace is running 80 MB below the level needed for it to be met.
Russia and Ukraine continue to trade punches but concerns from the hostilities are not as intense as they were a few weeks ago. This is evident from the recent sell-off in wheat. Exports have improved with inspections a marketing year high of 21.3 MB. To reach USDA’s target of 725 MB, we must ship 14.1 MB each week. Keep in mind that Russia will be a thorn in our side as they have a large crop to export. In other matters, harvest is winding down at 80 percent complete versus the average of 83 percent. The rating for the spring wheat crop slid 7 percent last week to 42 percent in good-to-excellent condition and compares to last year’s rating of 70 percent.
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