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Corn Outlook:
Three issues are currently on the minds of grain traders. One is what Trump’s tariff policy be when he takes office in January. While Mexico indicates that they may be willing to negotiate, China is questionable. The other two issues are weather in Brazil, which is mostly benign, and exports. If weather remains favorable in Brazil, they could see a record corn crop. Looking at exports, the overall pace has picked up in the past couple of weeks but has a way to go in meeting USDA’s target of 2.325 BB. Last week, inspections were 36.4 MB and must average 48.4 MB each to reach their projection. So far this season, there has not been a shipment that large. The bottom line in corn is that extended price gains will be difficult to achieve without a production flare up in South America.
Bean Outlook
Improving weather in Brazil has facilitated planting of their soybean crop which is 83 percent complete compared to 74 percent a year ago. Right now, everyone is focused on Brazil’s weather, which currently shows no threats on the horizon. Unless one develops, they are likely headed for another record crop. One private source puts their production at 170.0 million tons compared to USDA’s estimate of 169.0 million. Meanwhile, exports have probably peaked as China’s interest is beginning to turn to Brazil. Last week, inspections were 76.7 MB with the pace having declined 6.8 percent since mid-November. Meanwhile, China took 34.9 percent of the shipments, which is down 12.1 percent during the same period. As mentioned in previous comments, our exports tend to peak in November. The bottom line in soybeans is that if exports have peaked, and weather remains favorable in South America, price gains will be limited.
Wheat Outlook:
There is not much news in wheat other than the winter crop in the Midwest and southern Plains has gone dormant with recent moisture being beneficial. In the meantime, much of the crop in the Black Sea region is in poor condition. Looking at exports, inspections last week were disappointing at 10.8 MB. They must average 16.2 MB each week to meet USDA’s target of 825 MB. There has not been a shipment this large since the end of September. Meanwhile, reports have surfaced that Russia may lower their exports starting in mid-February. The bottom line in wheat is the funds are short 460 MB which is their largest position since early July. This may lead to a recovery before the year ends.
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