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The government shutdown has been an inconvenience to traders and the ag industry, but they are working around it. Although the crop reports from the USDA are unavailable, many are relying on information and estimates from private sources. While the USDA has more accurate data, the ag industry is not operating totally in the dark. Meanwhile, the acreage debate for planted acres this spring is heating up with corn holding an edge over soybeans. While sales of corn were dynamic early in the marketing year, shipments have lagged. Inspections last week were 39.9 MB and must average 51.0 MB on a weekly basis to reach USDA’s target of 2.450 BB. Unless China steps in soon with purchases for their ethanol industry, their projection could be in jeopardy.
Weakness in soybeans of late means that reality is setting in that China’s future purchases may not live up to expectations. At best count, they have probably purchased 5.0 million tons since trade negotiations began with the U.S. Expectations were that they might buy up to 8.0 million tons, possibly more. Although little has been said about African Swine Fever recently, we must face the fact that it has taken a toll on China’s hog population, which will obviously have an impact upon their purchases. This week, it was reported that their December imports were down 40 percent from a year ago, the lowest since December 2011. Meanwhile, inspections improved last week to 39.8 MB and were above the average needed to reach USDA’s target of 1.9 BB. Dry weather in southern Brazil has been a concern recently with many sources lowering their production estimates. However, this has been in the news a while meaning that the upside in soybeans is probably limited.
There is not a great deal of fresh news in wheat with the market mostly following corn and soybeans. Competition with Russia remains intense as noted in a recent report that their exports are up 39.5 percent above a year ago. Meanwhile, export inspections saw an improvement last week at 20.0 MB. However, they were below the average of 25.2 MB that must be shipped on a weekly basis to reach USDA’s target of 1.0 BB.
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