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Concerns of corn yields being lowered in the crop report next month have fallen to the wayside. They are being overcome by harvest pressure, planting in Brazil, sluggish exports, strength in the dollar, and the outlook for higher interest rates. Currently, harvest is getting underway and is 9 percent complete compared to 7 percent a year ago and 7 percent for the average. While the USDA projects a 23 percent increase in exports over a year ago, they are getting off to a slow start as inspections last week were 25.2 MB. To reach USDA’s target of 2.050 BB for the new marketing year, they must average 40.0 MB every week. That said, unless there is a marked improvement in exports, their projection seems a bit ambitious.
Traders’ bullish soybeans on expectations of lower yields have met a headwind from the beginning of harvest, planting getting underway in Brazil, and sluggish exports. Harvest is just now starting and is 5 percent complete compared to 3 percent a year ago and 4 percent for the average. Meanwhile, Brazil is projected to plant a record crop that could top 163.0 million tons versus 156.0 million a year ago. Also, their exports are forecast to be up 2.0 million tons from last year. However, U.S. exports are expected to be down 200 MB. Last week, inspections were only 14.4 MB and must average 35.2 MB each week to reach USDA’s target of 1.790 BB. China took shipments of 6.4 MB but will continue to look to Brazil as their primary supplier. It is still early in the marketing season, but unless there is an improvement in exports soon, USDA’s projection will fall behind the eight ball.
Tensions remain high between Russia and Ukraine in the Black Sea, but Ukraine is finding alternative routes for shipping wheat. This is reflected in the USDA increasing their exports last month by 500,000 tons. Meanwhile, Russia’s exports were also raised 1.0 million tons. Looking at U.S. exports, they are holding their own. Last week, shipments were 13.4 MB, which was slightly below the average of 13.8 MB that must be shipped weekly to achieve USDA’s projection of 700 MB. Currently, if we stay on pace, they might reach 770 MB. In other developments, winter wheat planting is slightly behind at 15 percent complete compared to 19 percent a year ago and 16 percent for the average. Meanwhile, harvest of the spring crop is winding down at 93 percent done.
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