On The Money Grain Commentary 1-18-2008

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Corn Outlook:

Corn needs a story to tell, but may have to wait until this spring when the planters begin to roll. With a record yield under the belt for 2017 and U.S. ending stocks their highest in over twenty years, it is difficult to paint much of a bullish picture. However, there are a couple of bright spots. One is that world stocks have declined from the record set a year ago. Secondly, global stocks-to-usage have fallen for the second consecutive year. In the meantime, the funds are sporting a massive short position of 1.265 BB. This suggests that it may be difficult to pressure the market a great deal further, as bearish fundamentals have largely been factored into values. Looking at exports, inspections last week were 23.0 MB and must average 44.0 MB each week if USDA’s projection of 1.925 BB is to be reached.

Bean Outlook:

Soybean futures have managed to rebound following last week’s negative crop report, but it may be just a flash in the pan. U.S. ending stocks are at their highest level since 2006, while world stocks have set a new record. In addition, U.S. stocks-to-usage have risen for four straight years while global stocks-to-usage are at their second highest mark. That said, it is difficult to build a bullish outlook for the time being. A supportive short-term factor, however, is the funds are short 615 MB, which is not that far from the record of 735 MB. Looking at exports, they continue to decline with inspections last week at 45.2 MB. Since November, the pace has fallen 50 percent.

Wheat Outlook:

Wheat has met a headwind recently from the forecast of warming temperatures in the Midwest and southern Plains. The artic type temperatures from a couple of weeks ago have probably done some damage, but it is becoming old news. In the meantime, we are staring at record global stocks, along with stocks-to-usage their highest level since 1998. Currently, the supportive factor for wheat is that U.S. acres continue to decline, while the funds are short a whopping 735 MB. Meanwhile, exports are struggling with inspections last week at 13.5 MB. Over the past three weeks, the pace has fallen 24 percent. However, this should not be a big surprise as the USDA has upped exports from the Black Sea region by 6.0 million tons.

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