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Corn Outlook:
Demand has been the shining star in corn, and it continues to be strong. However, there may be some cracks developing. One is the USDA lowered Mexico’s imports, our largest customer, in the last crop report by 2 percent. While it is not a big reduction, if there are further cuts, the loss would need to be made up somewhere else, possibly by China. Another concern is that cattle placed on feed in August were 9 percent below a year ago, which means feed consumption could be lowered in following reports. Also, the national average for gas prices is nearly $4.50 per gallon and climbing. The increase is digging into consumers’ wallets, meaning a cutback in driving can be expected to reduce spending at the pump. This would tend to lower ethanol consumption. The bottom line is demand may begin to hit some speed bumps. In other matters, harvest is in full swing at 13 percent complete compared to 10 percent a year ago and 11 percent for the average.
Bean Outlook
The long-awaited summit meeting between President Trump and Xi is underway with traders hopeful of China purchasing more ag products, especially soybeans. Both sides have agreed to the current trade truce being extended until January. In anticipation of a positive outcome from the meeting, the fund long position has grown to its largest since January 2021, leaving little room for disappointment. Meanwhile, exports have been struggling during the new marketing year with inspections last week of 27.8 MB. This is below the average of 33.1 MB that must be shipped each week to meet USDA’s target of 1.685 BB. In other news, planting has begun in Brazil with favorable weather being reported and another record crop expected. Harvest is underway in the Midwest and is 12 percent complete compared to 8 percent a year ago and 8 percent for the average. The bottom line in soybeans is that for current values to be sustained, a positive outcome will be needed in the summit meeting with China.
Wheat Outlook:
There is not much fresh news in wheat. The war between Russia and Ukraine continues to rage which is limiting exports from the Black Sea. This may swing some business to the U.S. but, so far, little has shown up. Last week, inspections were 12.3 MB which is below the average of 15.3 MB that must be shipped weekly to meet USDA’s target of 775 MB. While export estimates have been lowered for Ukraine and Russia, they have been increased for Argentina, Australia, and Canada. Currently, the U.S. continues to be overpriced compared to our competitors. In other news, planting of the winter wheat crop is running slightly behind at 17 percent complete compared to 19 percent a year ago and 21 percent for the average.
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