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Corn Outlook:
Corn harvest is in the backstretch at 81 percent complete which means the focus in the weeks ahead will be on weather in South America and exports. As it stands now, conditions in Brazil are favorable with no threats on the horizon. That said, exports may have to play a bigger role. Mexico has been an active buyer the past few weeks, but their purchases may be front end loaded because of the uncertainty surrounding the US election. Last week, export inspections were 32.4 MB and below the average of 46.9 MB that must be shipped weekly to meet USDA’s target of 2.325 BB. The bottom line in corn is that reaching USDA’s projection may be challenging, and the upside potential in values could be limited unless a production threat arises in South America.
Bean Outlook
The finish line is in sight for harvesting soybeans as it is 89 percent complete. This suggests that weather in Brazil will take center stage this fall and winter. Their planting has gotten off to a slow start at 18 percent complete compared to 30 percent a year ago, but conditions have improved, which will allow them to catch up. In the meantime, exports have been red hot with China stepping up to the plate with large purchases recently. However, they are likely front-end loaded because of possible tariffs if Trump is elected. Last week, export inspections were 87.9 MB with China taking 54.8 MB. As mentioned in previous comments, an increase in exports has been expected, but be aware they will likely peak in November. If they follow the norm, once a peak occurs, an 80 percent decline in shipments could follow through the end of the marketing year. The bottom line in soybeans is that if Brazil produces a normal crop, the upside price potential will be limited.
Wheat Outlook:
Of the grains, wheat has the soundest fundamentals. Since 2019, global stocks have been declining while Russia’s production has fallen the past 2 years. Meanwhile, eighty percent of the winter wheat crop is planted, but it is off to a problematic start with only 38 percent of the crop rated in good-to-excellent condition, the second lowest since 1986. While this offers optimism, exports are struggling. Last week, inspections were 9.1 MB and below the average of 15.3 MB that must be shipped weekly to meet USDA’s target of 825 MB. Since late September, the pace has been declining. The bottom line in wheat is that the outlook shows signs of improvement, but a catalyst may be needed to compel the funds to cover their shorts.
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