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Corn Outlook:
Anxiety persists in the grains because of repercussions that could be felt from the Trump Administration’s imposition of import tariffs against China, Mexico, Canada, and possibly others. However, the corn market has largely shrugged off the uncertainty because of production issues in Argentina and the improvement in exports since early January. As a result of their weather problems, the USDA has lowered Argentina’s production 3.0 million tons. Looking at exports, inspections this week exceeded the previous week’s total at 52.5 MB. To meet USDA’s target of 2.450 BB, they must average 53.1 MB. Right now, the biggest threat to the corn market is the size of the fund long position. The traditional funds hold their largest position since May 2022, while the longs of the index funds are the greatest since August 2010. Combined, their position slightly exceeds 3.5 BB. This could be a wrecking ball if the market hiccups, and they liquidate.
Bean Outlook
In the event of a trade dispute with China arising from the tariffs imposed by the Trump Administration, soybeans would be affected the most as China would increase their imports from Brazil. However, that is already happening and will continue as long as Brazil’s production continues to grow. Meanwhile, so far, China has not placed a retaliatory tariff on soybeans. In the meantime, exports continue to decline. Inspections last week were below the previous week at 38.2 MB with China taking 20.3 MB. Since mid-November, deliveries to them have declined 74.0 percent while our overall shipments have fallen 59.4 percent. Looking at the funds, the traditional funds are long a token 40 MB, but the position of the index funds is slightly over 1.0 BB, their largest since November 2010. The bottom line is their position is extremely excessive considering global stockpiles are at a record.
Wheat Outlook:
There is not a lot of fresh news in wheat. The crop is in relatively good condition in the central and southern Plains, but recent freezing temperatures may have caused winterkill on the crop that does not have snow cover. Most of the support in wheat is stemming from the covering of short positions by the funds. Looking at exports, they are erratic as inspections last week were 19.7 MB, nearly double the previous week. To meet USDA’s target of 850 MB, they must average 19.6 MB each week, which may be difficult to achieve since global exports are projected to decline 3.1 million tons.
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