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The corn market continues to see fallout from the crop report on Monday where the USDA lowered planted corn acres only 1.7 million to 90.0 million and harvested acres 1.6 million to 82.0 million. In the meantime, they increased their yield estimate 3.5 bpa to 169.5 bpa. While, the higher than expected planted acres can be attributed to the MFP2 government payment inducing producers to plant, USDA’s yield assessment is being questioned because of the lateness of the crop and this season’s growing conditions. Last week, the crop rating remained unchanged at 57 percent in good-to-excellent condition. According to Ag Watch’s yield model, the national yield is 166.1 bpa. Looking at exports, inspections last week were 27.6 MB with the pace falling short of reaching USDA’s target of 2.1 BB.
The soybean outlook is a bit brighter as 2019-20 ending stocks of 755 MB are down from last year’s record of 1.070 BB while world stockpiles fell for the first time in 7 years. Although this may stir some bullish interest, we face plenty of competition from Brazil as their exports are projected to rise 500,000 tons to 76.5 million, while U.S. exports for 2019-20 are forecast to fall 100 MB to 1.775 BB. This would be the slowest pace of shipments since 2013. Meanwhile, China’s imports are expected to decline 2.0 million tons because of African Swine Fever. Export inspections this week were 34.6 MB with shipments having to stretch hard to reach USDA’s target of 1.7 BB. In other developments, the crop rating stood unchanged last week at 54 percent in good-to-excellent condition. According to Ag Watch’s yield model, the national yield is 49.0 bpa versus USDA’s estimate of 48.5 MB. The crop is running nearly 2 weeks behind in maturity with Illinois, Indiana, Iowa, Ohio, and South Dakota lagging the most. The market got some inspiration on Tuesday from a U.S. trade representative announcing that a 10 percent tariff on Chinese goods will be delayed because of health, safety, and security reasons.
While U.S. ending stocks of wheat have slipped from a year ago, world stockpiles remain at a record. Last week, export inspections were a marketing year high of 25.3 MB and above the average of 18.9 MB that need to be shipped on a weekly basis to reach USDA’s target of 975 MB. While export competition from the EU and Russia is not expected to be as intense, it will increase from Ukraine. In other developments, winter wheat harvest is winding down at 89 percent done while spring wheat is off to a slow start at 8 percent complete versus the average of 30 percent.
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