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Corn Outlook:
It has been an unsettling time in the grains the past couple of weeks as the conflict rages with Iran, causing a closure of the Strait of Hormuz that has led to hectic trading in the energies, and a rally in the dollar. On Monday, there was a sharp slide in the energies and grains when President Trump commented that the war will soon be over. However, the decline in the equity markets tells a different story. Corn came under the gun because of the sharp sell-off in crude oil but recovered midweek when crude rebounded. Meanwhile, ending stocks are hefty at 2.127 MB, and global stockpiles are forecast to rise 3.8 million tons to 292.8 million, implying there is no shortage. Looking at exports, inspections last week were disappointing at 59.7 MB. This was below the average of 67.1 MB that must be shipped weekly to meet USDA’s target of 3.3 BB. Currently, we are barely on track for it being met.
Bean Outlook
Hope that China will purchase additional soybeans when President Trump and Xi of China meet in April continues to support the market, along with optimism the EPA will increase the biofuel mandate. This is evident from the fund’s long position being at a 3-year high. With enthusiasm at such an extreme level, there is no room for disappointment. Be aware that Brazil is sporting a record crop with Brazilian export values $50 per ton cheaper than the U.S. Meanwhile, exports backed off last week with inspections below the previous week at 32.3 MB. China took 15.1 MB, but the pace of shipments to them has fallen 27 percent since early February, while our overall pace has declined 29 percent. The bottom line is the math does not add up for China to buy additional soybeans from the U.S. For it to happen, it may boil down to reduced support by the Administration for Taiwan.
Wheat Outlook:
Wheat has mostly been supported by fund short covering and the closure of the Strait of Hormuz. However, this week’s sell-off indicates their short covering may be close running the course. Meanwhile, support may surface when the winter crop emerges from dormancy and weather becomes a factor. Looking at exports, inspections last week at 18.2 MB exceeded those of the previous week and were above the average of 16.4 MB that must be shipped weekly to meet USDA’s target of 900 MB. Right now, it is nip and tuck as to whether it will be met, especially with the EU $34 per ton cheaper than the U.S.
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