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For a price recovery to get underway in corn, demand must pick up the slack and carry the load now that the window on weather has closed. However, that will be easier said than done as the crop potential looks strong and ending stocks at 2.6 BB are their highest in over 20 years. With a crop rating of 72 percent in good-to-excellent condition, Ag Watch’s yield model puts the national yield at 179.1 bpa versus USDA’s estimate of 178.5 bpa. This could add an additional 55 MB to ending stocks bringing them to over 2.7 BB. Meanwhile, the export pace has fallen 25 percent since peaking in mid-May. Last week, inspections were 28.1 MB, their lowest since mid-April. Bottom line—if there is a time that business is needed from China, it is now.
China continues to be a steady buyer of soybeans usually making 1-3 purchases each week. However, as we get closer to harvest, their interest will turn more to South America. Since late June, the export pace has picked up with inspections last week 20.2 MB, their highest since late April. In other developments, the crop potential looks strong with the rating up one-point last week to 73 percent in good-to-excellent condition. According to Ag Watch’s yield model, the national yield is 51.1 bpa compared to USDA’s estimate of 49.8 bpa. If realized, this could increase ending stocks 107 MB from 425 MB to 532 MB. While August is a critical month for soybeans, there are no threats through the middle of the month. That said, China will remain in the spotlight.
Improving conditions in Russia and expectations for a production increase is weighing on wheat. The market may remain under pressure until winter harvest is complete. Last week, it was 85 percent finished versus the average of 88 percent. Meanwhile, the harvest of the spring crop is gearing up and is 5 percent complete compared to the average of 10 percent. Looking at exports, inspections last week were 18.8 MB and above the average needed to reach USDA’s projection of 950. If the pace continues, they could top 1.0 BB.
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