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Corn Outlook:
Optimism abounds that China will soon acquire a huge appetite for U.S. corn. USDA projects sales to them at 13 million tons. However, many analysts think that they could import as much as 22-30 million tons. Meanwhile, much of their anticipated business may already be factored into values as the funds are sporting a huge, long position of 1.495 BB. This suggests that China must step up to the plate and deliver to avoid disappointment, as the export pace has trickled lower since early October. Last week, inspections were 32.1 MB and must average 48.6 MB to reach USDA’s target of 2.325 BB. In other developments, weather is improving in Brazil with a record crop being forecast.
Bean Outlook:
Soybeans are in orbit and appear to be headed to the moon because of strong demand. Last week, export inspections were brisk at 82.3 MB with China taking 62.6 MB, or 76 percent of shipments. The export pace has been rising since the beginning of the marketing year in early September. However, a crack may be starting to develop as the pace of shipments to China saw its first downtick of the season last week. This could be a sign that their interest may soon switch to South America. As mentioned, in previous comments, exports tend to peak in November and decline through the end of the marketing year. Currently, the funds are long 940 MB which is a considerable length and should not be taken lightly. If you read the news headlines, there are very few analysts who are not in the bulls’ camp.
Wheat Outlook:
Wheat does not have much of a story to tell and is primarily following corn and soybeans. Although the dollar has weakened, export competition remains intense with Russia. Last week, inspections were nominal at 11.9 MB. We must ship 19.0 MB each week to meet USDA’s projection of 975 MB and have not seen a number this high since early October. Meanwhile, the crop improved for the third week in a row with the rating up one-point to 46 percent in good-to-excellent condition.
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