The early morning optimism in the grain markets turned out to be quite fleeting and prices turned lower into the close. We did not press into lower lows for the move at that time but now during the overnight hours the bear has been successful in doing just that.
As reported yesterday, recent Egyptian business went to Romania and Russia and Saudi business yesterday was all optional origin and most likely will be sourced from Europe. Export inspections were actually a little better than expected and came through at 21.4 million bushels. This was the highest weekly total in a month. This is slightly above the 18.3 million pace we need but needless to say, this is very early in the year and we remain less than competitive on the world stage.
There were no surprises in the weekly conditions reports as the good/excellent rating for spring wheat dropped 1% to 71%. It is estimated that 10% of the spring wheat is heading compared to an average for this date of 16%. Winter wheat harvest has reached the 33% completed stage, just 2% ahead of the average with sub standard yields continuing to be reported.
The failure yesterday appears to have us positioned for continued weakness through the end of the month. I continue to look for spot futures to reach down to the gap targets between 5.67 and 5.62. While there is certainly nothing that says prices have to quit going lower, particularly with the competitive world trade right now but we have been pressing prices on that news for a number of weeks now and I continue to believe we should soon be in line for a corrective bounce.
It turned out that 3 days in a row of higher closes was enough for the corn market and the early concerns of too much rain was virtually forgotten. We actually posted an outside lower reversal and have continued south in the overnight hours.
Export inspections slipped a bit this past week coming through at 38.9 million bushels. This brings the year to date tally up to 1.455 billion bushels and means we will need to average 44.5 million per week to reach the USDA target of 1.9 billion. World availability of corn should not be a problem right now as the Argentine farmer has continued to drag their feet and are still barely 45% harvested and Brazil is into the 2nd harvest, reaching 5% complete.
As anticipated, crop conditions did slip but certainly held no surprises that would help the bull cause. The good/excellent rating slipped 2% but still stands at 74%. The overall forecast into early July continues to appear near ideal for corn as temperatures are expected to bump briefly above normal accompanied by frequent showers. Corn is already pollinating across the south with great conditions and with this outlook it would appear to hold the same promise as it moves north. Of course there will be no "official" yield estimates with the reports next week but I am confident many will be speculating that the USDA will be pushing the number above the trend line of 165.3 for the July reports.
The reversal yesterday looks dramatic but I do not believe it opened the door for any significant push lower at this time. We remain at key levels of support and I would expect to see prices track sideways now through Monday and without any shocking negative news, we should be in line for a corrective bump.
Bean have existed in a completely different world than the grains all year and that was demonstrated again yesterday as this market was able to sustain strength while the grains collapsed. Meal was the exception to this as it turned lower into the close pressured by the DDG market.
Export inspections were the lowest of the year at 2.3 million bushels. Year to date shipments now stand at 1.562 billion bushels and to reach the 1.6 billion target, we will need to average 3.8 million per week. The average for the past 5 weeks was 4.8 million but that is 1 million less than the 10 week average so the numbers are drifting lower.
As with the other crops there were no surprises in the weekly crop updates. Nationwide planting stands at 95% compete and the good/excellent rating dropped 1% and now stands at 72%.
Needless to say at this point, there is much banking on the reports next week for both the bulls and the bears and someone has to come out the loser. The action in the cash markets appears to have told us there is a greater availability of beans than previously projected but there is no assurance that will be confirmed or rejected by the government. It is a waiting game between now and then.