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Corn Outlook:
For the past couple of weeks, corn cashed in on the rally in soybeans from expectations of a trade deal with China. President Trump and Xi came to an agreement this week, but details regarding any corn purchases are lacking. Meanwhile, the corn market faces competition from Brazil as Conab forecasts their corn acreage for 2025-26 rising 4.0 percent to 56.0 million acres with production a record 138.2 million tons. Our exports have been a bright spot this season, so far, but show signs of peaking. Last week, inspections were 46.7 MB and below the average of 58.1 MB that must be shipped weekly to meet USDA’s target of 2.975 BB. This was the third week in a row they did not meet the average needed with the pace falling 12.2 percent. The bottom line is, unless there is an improvement, or weather in Brazil becomes a factor, this could haunt the market.
Bean Outlook
Traders have been hot and lathered for the past couple of weeks over a trade deal between the U.S. and China that includes soybeans. Trump mentioned that purchases by China will be substantial, and Treasury Secretary Bessent says that China has agreed to buy 12 million tons this harvest season, and 25 million tons annually over the next 3 years. However, there are reasons to be skeptical. First, the agreement is for one year and will be negotiated yearly. Second, a huge amount of money has been invested by China in Brazil’s port and transportation infrastructure. Third, Conab forecasts Brazil’s acreage for 2025-26 rising 3.5 percent to 121.2 million acres with production a record 177.6 million tons. Another source puts their production as high as 178.5 million tons. USDA’s last estimate is 175.0 million tons. Lastly, exports from Brazil will be available in late January. These issues cast a cloud over substantial exports to China. The bottom line in soybeans is that substantial purchases from China have been factored into values. Furthermore, any agreement must be binding as China has a long history of not performing.
Wheat Outlook:
For the past week, wheat has been riding higher on the coattails of soybeans as there is little fresh fundamental news. However, that seems to have ended for now. Meanwhile, planting of the winter crop should be in the latter stage and close to wrapping up. Looking at exports, inspections last week were disappointing at 9.5 MB and below the average of 15.4 MB that must be shipped weekly to meet USDA’s target of 900 MB. Shipments have been falling for the past 6 weeks and declined 43. 8 percent.
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