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Corn Outlook:
The holidays are approaching which means interest in the grains may soon wane. In the meantime, the focus remains on weather in South America, exports, and President Elect Trump’s position on tariffs. Regarding conditions in Brazil, they are currently favorable with CONAB projecting their corn production at 119.8 million tons, up 3.6 percent from a year ago. Meanwhile, exports are becoming a concern. Last week, inspections were 32.3 MB and below the average of 48.0 MB that must be shipped weekly to meet USDA’s target of 2.325 BB. So far this season, we have not seen a shipment this high. Furthermore, the pace of shipments has been rising since late September but dropped off last week. The bottom line is that the funds have abandoned their short position and are now long—a token 150 MB. However, the fundamentals are not supportive of its growing considering supply is abundant with exports possibly peaking.
Bean Outlook
Soybeans face a headwind as weather is benign in Brazil with a record crop possibly in the making. CONAB currently forecasts their production at 166.1 million tons, an increase of 12.5 percent from a year ago. In the meantime, China’s economy is struggling with COFCO projecting their imports to decline 9.7 percent to 98.8 million tons. Although exports have been robust the past few weeks, that may soon be ending. Last week, inspections fell from the previous week to 79.5 MB with China taking 51.0 MB. The export pace has been rising since the marketing year began in September but fell for the first time last week. As mentioned in previous comments, exports tend to peak in November. The bottom line is that unless a weather threat arises in South America, and with exports possibly peaking, price gains will be difficult to sustain.
Wheat Outlook:
Wheat has started to show some life even though the rating of the winter crop jumped 5 points last week to 49 percent in good-to-excellent condition. Support is currently twofold. One is that Russia’s crop has gone into dormancy in poor condition with the other being President Biden’s decision to allow Ukraine to use U.S. long range missiles for strikes in Russia, escalating tensions in the Black Sea region. Meanwhile, exports are disappointing. Last week, inspections were the second lowest of the season at 7.2 MB. Furthermore, since peaking in September, the pace of shipments has declined 60 percent. The bottom line is that with the U.S. crop soon going dormant, and exports on the blink, price gains may depend more on geopolitical uncertainty.
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