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Emboldened by a slight decrease in crop conditions here in the US as well as downgrades in crop estimates elsewhere around the globe, bulls in the grain and soy markets are hanging tough but have yet to make any real upside headway. It is too early in the week to break out the celebration hats but the one market that has been the standout for the past month and could be the candidate to launch into new high ground is wheat. They say to never count your chickens before they hatch but I continue to believe this is the one to watch as December futures have closed above 5.92 for the first time since June of 2015. If we can sustain or repeat that performance for the close on Friday, it would suggest we are entering a new realm with the potential to reach up to at least 6.61.
As I already noted, crop conditions did slip a bit this last week with good/excellent corn now standing at 71%. With the advanced stage of this crop and the generally dry conditions across the Midwest, this should be normal, but it does raise questions as to how well the ears are filling out. Too often overlooked is test weight in corn as 54-pound corn versus 58-pounds could make a 200 bushel per acre yield 186 bushels all else considered equal. Corn in the dough stage has reached 57%, which is 20% ahead of average and corn now dented stands at 12%, which is double the normal for this date.
Beans witnessed a slightly larger slip as we now have the good/excellent ranking at 67%, versus 70% the prior week. As we know, or at least believe, August is the bean month and weather conditions for much of the country have been anything but great. Beans blooming have reached 92% versus 86% normally and setting pods stood at 75% compared with 58% on average. While the news was not enough to carry beans back against the highs posted last week, it did appear to give the longs a little reason to try and defend the fort.
Internationally, the only update I have seen overnight comes from France. The Ag Ministry in that nation has reduced the corn crop estimate once again taking it from 14.3 MMT to 12.8 MMT. They also trimmed barley production estimates by 300,000 MT.
Estimates for Friday’s report are beginning to filter in and break down as follows; Corn production is expected to come in at 14.41 billion bushels from an average yield of 176.25 bpa. This compares with the official July figures of 14.23 and 174. 2017/18 carryout is expected to fall in at 2.018 billion versus 2.027 last month and the 2018/19 carryout, 1.636 compared with the July estimate of 1.552 billion. For beans, the average estimate for production stands at 4.416 billion bushels with a yield of 49.7 bpa. The July estimate was 4.30 billion and 48.5. Current crop year ending stocks are expected to come in at 462 million versus 465 in July and 18/19 stocks at 643 million compared with 580 million previously. Total wheat production is projected to fall in at 1.853 billion compared with 1.881 last month and ending stocks are expected to 964 million versus the least estimate of 985 million. Last but certainly not least, we have estimates for world ending stocks. 2018/19 corn is estimated to fall in around 152 MMT, which would be just a smidge above July but still 20% below the current crop year. Beans are projected to come in at 99.4 MMT, which would be up from 98.27 last month and 96.02 last year. Finally, in wheat, ending stocks are expected to tally 255.46 MMT. Last month this was pegged at 260.88 and last year came in at 273.5 MMT.
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