New month

We started the week's reports with our Monday weekly export inspection report at 10:00a.m. central time. Wheat inspected for near term export was 22 million bushels, up from 15.9 the week prior, 13.7 a year ago and four week average of 17 m.b. No surprise here as importers concerned about dry wheat fields in Europe and Russian grain prairies enter to garner supplies in case prices continue higher. Note importers have little to no wheat reserves due to record inventories on exporter ports. They have been very comfortable the last 10 months buying hand to mouth as needed and letting exporting countries fat with inventory sit on it and pay the cost of storage. Now they find themselves concerned about future inventory availability and value. So, they scramble to get ahead of demand. Corn inspections were 31.5 m.b. versus a bullish 42.8 the week prior and four week average of 37. 30 to 39 is friendly and over 40 m.b. bullish so we pulled back to the low end of friendly but it's still a good demand signal. Soybean inspections were 5.9 m.b. versus 7.1 last week and our four week average of 5.5. Not bad considering last week's rally and strong weekly close. With the U.S., the worlds primary high protein port, you have to expect demand to remain at a record pace with crop problems continuing with the world's largest bean user China and now weather issues for small feed grains in Europe and Russian prairies. So, what about those weather issues? When we entered Monday the first thing traders saw was a strong overnight rally on a forecast for another week of record heat and dryness in Russia with temperatures of 107 degrees being hit. Early estimates look for Russia's grain exports to be cut in half and that's the initial conservative estimate with talk that if the drought continues the government may suspend exports until the totality is know. Farmers are said to be hoarding of old and new crop on anticipation of higher prices creating a cash product crunch. Still a developing story. Do not lose sight of our old friend China, which before the foreign port weather issues was the reason for record U.S. corn and bean exports. Their weather issues continue with flooding in the northern grain growing areas and drought in the south. To insure shortages in rural areas are met for feed, the government plans to sell another 1.58 m.m.t. of corn to their local end users by way of auction. With prices in the U.S. cheaper than Chinas corn prices and China under mandate to build the grain reserves they are tapping into, it's clear they will turn to and continue to buy U.S. corn. After the close of trading Monday our crop condition reports came out. Our spring wheat crop was 82% in good to excellent condition down 1% on the week but 11% better than a year ago. Harvest has begun at 5% complete. The crops made and can't be hurt from here with 98% of the heads fully developed. Corn came in at 71% in G-E condition down 1% from the week prior, our lowest rating of the year but 6% over a year ago. The eastern grain belt states of Illinois, Indiana, and Ohio remain the lowest ratings and under the nation average with the western belt the highest with Iowa 70% and Nebraska 84% G-E. Soybean conditions were 66% G-E down 1% from the week prior and a year ago. Eastern and western grain belt states were all unchanged or up on the week with smaller producers in the southern delta as key loses. 47% of the crop is yet to enter the key pod setting stage leaving weather as our key pricing source. December corn has first support to buy at 4.00. A close under and 3.84 is next support. November beans have first support at 10.00 with a close under setting up 9.80 as next support. Buyers should be aggressive to buy support but equally aggressive to get out with tight stops as longs are still fat with profits and breaks can be fast. Wheat basis September futures has the excellerated trend line support at 6.30 Wednesday and 6.50 on Friday. Those who are long should use a close under these supports to get out if accures.

Heres my crop report estimates, no world numbers.Tim Hannagan pfg

                  YOUR FORECAST USDA LAST ESTIMATE

CORN PRODUCTION 12.990 13.245 BILLION
CORN YIELD 162.8 163.5 BUSHELS
SOYBEAN PRODUCTION 3.300 3.345 BILLION
SOY YIELD 42.4 42.9 BUSHELS

2010-11 U.S. CARRYOVERS
CORN 1.200 1.373 BILLION
SOYBEANS 345 360 MILLION
WHEAT 985 1.093 BILLION

2010-11 WORLD CARRYOVERS
CORN 141.08 MILLION TONS
SOYBEANS none 67.76 MILLION TONS
WHEAT 187.05 MILLION TONS