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Corn Outlook:
Phase I of the trade agreement goes into effect on February 15th and traders are hopeful that China will announce purchases as soon as next week. However, they may wait until the coronavirus is under control before meeting their obligation. For now, this is probably their greatest priority. The latest count is that over 60,000 cases and 1,300 deaths have been reported. As secretive as China is about their affairs, this is likely a very conservative estimate. Meanwhile, corn exports have shown some life as inspections last week were a marketing year high of 30.2 MB. Since early January the pace of shipments has risen nearly 18 percent. However, USDA’s lowering their export projection 50 MB this week suggests that enthusiasm should be contained for the moment.
Bean Outlook:
Expectations are high that China will purchase a large quantity of U.S. soybeans when the trade agreement goes into effect. However, USDA increasing China’s imports 3.0 million tons, and U.S. exports 50 MB in the supply-demand report this week may have factored in a good part of the Phase I deal. In the meantime, China appears to be turning their interest to Brazil’s crop which is 16 percent harvested. Last week, they purchased 30 vessels of Brazilian soybeans for March delivery. Meanwhile, U.S. export inspections were a marketing year low of 22.1 MB with China taking only 3.6 MB. This is their smallest shipment since October. That said, the bulls may want to tread lightly.
Wheat Outlook:
There is not a lot to say about wheat. It has been pressured recently as conditions in Europe and Australia are improving. Looking at exports, inspections last week at 19.2 MB were the best seen since mid-December with the pace of shipments picking up the past couple of weeks. The funds are currently long a modest 105 MB but may not increase their position unless the fundamentals improve.
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