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Weekly review

By Kristi Guse - Columnist | Jul 20, 2021

The updated domestic corn balance sheets were mostly as expected in Monday’s release. The USDA incorporated the acreage figures from the June report, publishing corn acres at 92.7 million. As expected, the yield forecasts were left unchanged at 179.5 bushels per acre, for a production estimate of 15.165 billion bushels. Feed usage increased 25 million bushels and export demand was forecasted 50 million bushels higher putting the new crop carryout estimate at 1.432 billion bushels.

Only minor changes were made in the old crop soybean balance sheets. As with corn, the USDA carried the June acreage figure into Monday’s release, which left acres steady at 87.6 million. Yield estimates were also unchanged at 50.8 bushels per acre, putting the production estimate at 4.405 billion bushels. No demand changes were reported either putting the July carryout estimate at a still snug 155 million bushels.

A few noticeable changes were made to the South American corn production estimates. Argentina’s corn production estimate was increased 1.5 MMT to 48.5 MMT, 1 MMT above trade’s expectations. Brazilian corn production dropped 5.5 MMT to 93 MMT, not quite as much as expected and well under private estimates.

Crop conditions didn’t see much of a boost from rains late last week and into the weekend as traders expected. Corn ratings improved for the first time this season by 1% to 65% good/excellent. Dry conditions are still very pronounced in Minnesota and the Dakotas all in the single digits in the excellent column. Corn silking is now at 26%, just 4% behind the 5-year average and on course in the dough stage at 3%. Soybean ratings stayed unchanged at 59% good/excellent. Soybeans blooming now stands at 46%, 6% over the 5-year average with 10% setting pods.

Soybeans found support during the week from spillover from the veg oils, with a drought in Canada affecting canola. Canola oil prices have ran up 20% in 5 days due to concern over the crop in Canada. While the drought conditions continue to extend from the northern and northwestern Plains into the Canadian Prairies over the next 10 days.

Estimates for 2020/2021 Argentina corn crop are at 47.0 MMT, unchanged this week. Harvest was rated this week at 56% completed, behind last year’s rate of 86%, showing much better yields on the later planted corn than originally expected. Brazil’s corn harvest is close to 21% complete, compared to 36% complete this time last year. There are reports that Brazil bought Argentine corn, booking 10-15 boats last week, but no word on when the shipments will be.

After a robust start, soybean crush demand is beginning to level out. The National Oilseed Processors Association (NOPA) reported that their members crushed 152.4 million bushels during the month of June. The total was a large 7.1 million bushels below the average trade estimate, 3 million below the lowest range and the lowest monthly volume in 2 years. The USDA’s forecast for a 5 million bushel increase is now being questioned. According to sources, if the pace of the past three months continues through August, expectations are the total will fall 15-20 million bushels short of the current target. The USDA cut 5 million bushels from their estimate in Monday’s report.

For more information, you may contact Kristi Guse at (712)-260-6486, or e-mail at kguse@maxyieldgrain.com. The opinions and views expressed in this commentary are solely those of Kristi Guse. Data used in writing this commentary obtained from various sources believed to be accurate. This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position. Please visit our Risk Disclosure Page for more information on commodity trading.

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