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Corn Outlook:
There have been no frills, no thrills in corn lately as it continues to meet a strong headwind from abundant global stocks, the prospect of increased sales from Argentina, sluggish U.S. exports, and fewer cattle being placed on feed. The factor that has underpinned the market the past few weeks is fund short covering. Last week, they liquidated 165 MB reducing their short position to 425 MB. Back home, exports are a sore spot as they are running 22 percent behind a year ago. Inspections last week were 28.3 MB, and below the average needed to reach USDA’s projection of 1.750 BB. At the current pace, they could be lowered another 200 MB. Looking at 2016, it will be an interesting year as weather is always a proverbial unknown, but a greater uncertainty could be the geopolitical environment and the economy.
Bean Outlook:
Soybeans continue to be supported by dry conditions in the Brazilian state of Mato Grossa. Although scattered showers are in the forecast, some areas have not seen rain in 30 days, and we could see a cut in their production. Meanwhile, a bumper crop in South America is still in the making. Export inspections last week were better than expected at 53.7 MB with China taking 40.5 MB or 75 percent of shipments. However, exports peaked in November with the pace having since fallen 34 percent. Look for this trend to continue as the focus of end users is mostly for South American origin. Soybean values have risen the past week even though the funds added 110 MB to their short position increasing it to 370 MB. They may decide to cover a portion of their position if dry conditions persist much longer in Mato Grossa.
Wheat Outlook:
Wheat is mostly taking its direction from corn and soybeans. Exports have picked up the past couple of weeks with inspections last week totaling 17.4 MB. However, we are over half way through the marketing year and have a long way to go in reaching USDA’s projection of 800 MB. We have to ship 15.8 MB each week to reach their target, and that may be a tall order to fulfill as the export tax in Argentina has been eliminated. In other developments, the funds shed 105 MB of their short position last week reducing it to 445 MB. Two weeks ago, it stood within 5 MB of the record set in May at 555 MB.
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