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Corn Outlook:
All eyes are focused on China. Bullish sentiment is high from the trade deal in which China agreed to increase purchases of U.S. grain. However, skepticism is warranted as the agreement is non-binding and has no penalties for nonperformance. Meanwhile, exports continue to be the bright spot in corn as cumulative shipments are 64 percent above last year. Inspections last week were a marketing year high of 65.6 MB, and above the average of 57.9 MB that must be shipped weekly to meet USDA’s target of 2.975 BB. Mexico continues to be our biggest buyer. Next week, on November 14th, the USDA will release the crop report which will be scrutinized closely because of the lack of data stemming from the government shutdown. Although their yield estimate is expected to be lowered, stocks will remain high.
Bean Outlook
For the past few weeks, traders have been euphoric over the prospect of China buying U.S. soybeans. According to the agreement in the trade deal, they will purchase 12 million tons by the end of the year and 25 million tons annually for the next 3 years. However, what they agree upon and what they do may be a different story. Also, a ruling by the Supreme Court, as to whether the Trump tariffs are legal, could put the deal in jeopardy. Meanwhile, last week, China bought 10 cargoes of soybeans from Brazil for December delivery, and another 10 cargoes for the March-July period because of Brazil being cheaper than the U.S. This shows they will buy from the cheapest source regardless of the agreement. Looking at exports, inspections last week were below the previous week at 35.4 MB, but above the average of 32.5 MB that must be shipped weekly to meet USDA’s target of 1.685 BB. The bottom line in soybeans is that exports are running 40 percent below a year ago, plus some sources expect a record crop in Brazil of 178.5 million tons. With that in mind, current values will be difficult to sustain if China does not fulfil their end of the agreement, or the Supreme Court does not support Trump.
Wheat Outlook:
Wheat has been supported from the rally in soybeans, but also from possible interest by China. It has been reported that they have bought 2 cargoes, which is not a great amount. Meanwhile, export inspections last week were below the previous week at 12.8 MB and the average of 15.5 MB that must be shipped weekly to meet USDA’s projection of 900 MB. Global competition is expected to be intense as SovEcon has increased Russia’s exports 400,000 tons to 43.8 million.
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