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Corn Outlook:
Last week’s surprise cuts by the USDA in their yield and production estimate for corn shocked everyone and stirred up bullish interest. While USDA’s ending stocks forecast of 1.540 BB is not considered a surplus, supplies are adequate. The surge in prices that followed could create a dark cloud in exports as the dollar is at its highest level since November 2022, as well as being near an historic high against the Brazilian real. Meanwhile, last week, inspections were a marketing year high of 56.7 MB. However, this was largely because of Mexico taking delivery on previous sales. For USDA’s export projection of 2.450 BB to be met, we must ship 53.1 MB each week for the remainder of the marketing year. This may be a difficult task considering the strength of the dollar which could lead to Brazil cutting deeper into our export business.
Bean Outlook
While USDA’s reduction in yield and production was more than expected, and caused ending stocks to fall to 380 MB, there is no shortage of supply. Furthermore, global stockpiles are at a record with stocks-to-usage being the second highest on record. While the USDA left their production estimate unchanged for Brazil at 169.0 million tons in last week’s report, some private sources project their crop at 170.0 million tons. Looking at exports, inspections last week exceeded the previous week at 49.6 MB with China taking 19.7 MB, their smallest shipment since late September. Since mid-November deliveries to China have fallen 56 percent while our overall shipments have declined 35 percent. Exports will likely continue to fall because of the dollar’s strength, which means additional price gains may be difficult to sustain.
Wheat Outlook:
There is not much of a story to tell in wheat as the limelight is centered on corn and soybeans. The USDA lowered their export estimate for Ukraine and Russia in last week’s report, which is offering some support. Meanwhile, inspections last week were disappointing at 10.6 MB and below the average of 18.6 MB that must be shipped weekly to meet USDA’s target of 850 MB. Currently, the pace of shipments is on track for 742 MB.
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