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Corn Outlook:
Corn futures were supported the past couple of weeks from ideas of of the USDA increasing their demand and export estimate in the monthly WASDE crop report. Those expectations were exceeded on Tuesday when the USDA stunned everyone by lowering ending stocks 200 MB to 1.738 BB and increasing exports 150 MB to 2.475 BB. This seems a bit optimistic as China’s imports are down 2.0 million tons, while exports from Argentina, Brazil, and Ukraine, our largest competitors, remained unchanged. Also, the USDA left the average farm price unchanged at 410, which is odd considering the large increase in exports. Meanwhile, export inspections this week exceeded the previous week at 41.3 MB. To meet USDA’s revised target, we must ship 52.5 MB each week. So far, the largest shipment this season is 44.8 MB. The bottom line in corn is that gains will likely be limited unless weekly shipments begin stepping up to the plate.
Bean Outlook
Soybean planting is 95 percent finished in Brazil and, unless adverse weather arises, they appear to be headed for a record crop. Conditions there are mostly favorable, and are good in Argentina as well, but a few dry spots are being watched. In the crop report this week, the USDA left ending stocks unchanged at 470 MB but increased global stockpiles 200,000 tons to 131.9 million. Looking at exports, inspections fell last week to 59.6 MB with China taking 31.1 MB. Since early November, the overall pace of shipments has declined 13.8 percent, while deliveries to China have fallen 24.7 percent. The bottom line in soybeans is that China’s interest is turning to Brazil, and with record global stocks, price gains will be limited unless a production threat occurs in South America.
Wheat Outlook:
The winter wheat crop in the U.S. and Europe has gone into dormancy which means fresh news may be sparse until next spring. Meanwhile, the conflict between Ukraine and Russia continues to be watched, but hope is rising that negotiations settling their dispute might occur when President Elect Trump takes office in January. Currently, the most supportive factor in wheat is the funds are short 495 MB, their largest position since late April. This week, the USDA lowered their ending stocks estimate 20 MB to 795 MB but increased global stocks 300,000 tons to 257.9 million tons. Looking at exports, inspections last week were 8.2 MB and must average 17.5 MB to meet USDA’s revised target of 850 MB. The bottom line in wheat is that the funds are sporting a large short position and may soon cover which should offer support.
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