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Say goodbye to 2018 and hello to 2019. Right now, everyone is wondering what will be in store for the new year. Once thing that can be counted on is it will be turbulent if the volatility in the financial markets and geopolitical climate is any indication. The government shutdown has made an impact as many USDA reports are unavailable. In addition, traders will remain in the dark if USDA’s final crop report for 2018 is not released on January 11th. Meanwhile, export inspections for corn slipped last week to 35.9 MB. They must average 49.8 MB per week to reach USDA’s projection of 2.450 BB.
Traders are confident that China will buy U.S. soybeans in the next round of trade talks scheduled this month. While this is probably so, keep in mind that the U.S. is a secondary supplier in global exports of soybeans with Brazil being the primary exporter. During the past 3 years, the U.S.’s share of global exports has fallen 6.8 percent to 33.1 percent. However, that of Brazil has risen 9.1 percent to 51.8 percent. Long story short, we will probably not go back to the pre-tariff days when shipments averaged 15-30 MB each week. Meanwhile, global stockpiles are at a record level, and U.S. ending stocks could approach 1.0 BB. Looking at export inspections, they were uneventful at 24.9 MB last week. They must average 36.9 MB on a weekly basis to achieve USDA’s forecast of 1.9 BB. That seems like a tall order. Meanwhile, rumors of China buying 1.5 million tons and dryness in southern Brazil offered support mid-week.
Wheat continues to be haunted from lagging exports and intense competition from the Black Sea Region. During the past 3 years, their global share of exports has risen slightly over 10 percent. Last week, export inspections were a mundane 13.8 MB, their lowest since early November. We must ship 24.2 MB each week to reach USDA’s target of 1.0 BB. Currently, we are on track for shipments of 873 MB.
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