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Corn Outlook:
We may have witnessed the shortest trade war in history this week! For the past couple of weeks, anxiety has been building as to the repercussions that could occur if the Trump Administration followed through on their threat of imposing an import tariff against Mexico, Canada, and China. On the day the tariff was to go into effect, Mexico and Canada became weak kneed and agreed to negotiate, postponing the tariff for 30 days. However, China stood their ground and levied their own tariff. While tensions have eased for the moment, the drama is probably far from over. In other news, export inspections last were 42.9 MB and below the average of 53.1 MB that must be shipped weekly to meet USDA’s target of 2.450 BB. Currently, the greatest threat to corn is the index funds are long 2.350 BB, their largest position since July 2010. When they liquidate, it poses the threat of a significant decline.
Bean Outlook
Soybeans have mostly been influenced by the strength in corn but have also been supported from excessive rain in areas of Brazil, which has slowed harvest, as well as concerns of dryness in portions of Argentina. While private sources have lowered Argentina’s production recently, Brazil remains on track to produce a record crop. Looking at exports, inspections last week were higher than the previous week at 37.2 MB. China took 12.7 MB which was above the prior week, but the pace of shipments to them continues to decline and is down 74.0 percent since mid-November. Meanwhile, our overall deliveries have fallen 56 percent during the same period. If we follow the norm, they could fall 80 percent by the end of the marketing year. Keep in mind that China’s preferred source for soybeans is Brazil.
Wheat Outlook:
Finding news in wheat is difficult as it is mostly a spectator of corn. While the winter wheat crop in the eastern Black Sea region is in poor condition, relatively good conditions are present in the central and southern Plains. Meanwhile, exports are disappointing. Last week, inspections were below the previous week at only 9.2 MB. They must average 19.6 MB each week if we are to meet USDA’s target of 850 MB. The last time weekly inspections were this high was in late September. Right now, the primary supportive factor for wheat is that the funds are short 520 MB, their largest position since last April, and are beginning to cover.
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