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It's all about grain weather

Agriculture.com Staff 07/17/2006 @ 7:00am

This week is expected to be hot. How long will the heat stay? The range of estimates are, by the middle of the week to this weekend.

Two of the several public and private forecasters we follow which have thus far have had good success suggest both are in agreement the heat is reduced by Wed of next week and then paves the way for notable rain the last full week of July. If they succeed then look for the present shifting weather focus beginning to sway from corn to beans to apply pressure to soybean futures. And wouldn't you know well after when spring wheat needed the rains, are expected to receive rain also beginning July 23rd. Friday's National Weather Service maps, released after the close are viewed as bearish to corn, beans, wheat and cotton futures.

USDA Crop Report Highlights: From Wednesday's USDA crop production supply demand report, the high points are as follows. The biggest surprise domestically is how USDA increased export potential for corn and soybeans, even though our research suggest the USDA may have been correct in increasing the sales section, the inspections and inspections suggest USDA should have reduced both. As we only 7 weeks remaining in the marketing year, shipments for both corn and soybeans are not likely to make the department. And if the grain is not officially shipped by the end of August, the physical grain is moved into next marketing year. For corn our latest estimates suggest 70-80 million bushels may not be shipped with soybeans at 26 mil bu. The other key highlight of the USDA report was how projected global end stocks to use remain tighter than 2003 even though world end stocks of wheat did show stocks building. If history should happen to repeat itself, we look for futures to top near the March 2007 time frame. As it is then world wheat and corn producers are expected to show plenty of signals they are ready to answer the production call as a result of the higher than ave futures levels.

The Very Latest on Corn for Ethanol: interesting to not how USDA is changing its tune regarding the corn demand balance. USDA has been of the position where in order to meet the growing need for corn for ethanol, the path of least resistance is to shift soybean acres to corn. Most recently USDA is suggesting other possibilities include reducing corn for export and allow other countries such as Canada, Mexico, Egypt (yes that Egypt) increase its own corn production and place less dependency on USA supplies.

Other measures include increased competition from other products (corn stalks in particular) to step up research and production to achieve the Energy Departments 7.5 billion gallon target by the year 2012. Allendale does estimate present and facilities under construction and expansion have the ability to meet all but 1 billion gallons of the renewable target. Also of interest is how attention is also given to increased production of distillers dried grains as a competitive to soybean meal, protein feed source.

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Soybeans Rally on Demand, Weather