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Following the steep decline from a bearish stocks report last week, corn futures have since recovered on news of a trilateral trade agreement between the U.S., Canada, and Mexico. This should give exports a boost down the road. Meanwhile, optimism is rising that the Trump Administration may negotiate a similar agreement with our Asia-Pacific trading partners. Last week, export inspections were 52.9 MB which is above the average needed to reach USDA’s projection of 2.4 MB. Right now, we are on track to ship 2.250 BB, but it is still early in the marketing year. Harvest is proceeding without a hitch at 26 percent complete versus the average of 17 percent. Meanwhile, a wet forecast next week points to some delays. Looking at the funds they are turning less bearish as they have trimmed their short position 145 MB to 735 MB.
The new trade agreement with Canada and Mexico should boost soybean exports, especially if a similar agreement can be made with our Pacific trading partners. It may even prompt China to consider coming back to the negotiating table. Keep in mind that 80 percent of Brazil’s soybean exports go to China. That said, a production issue in Brazil would create a predicament for China if the U.S. strengthens relations with their other trading partners. Meanwhile, news is circulating that because of China’s tremendous demand for Brazilian soybeans, Brazil may have to import 1.0 million tons from the U.S. to avoid running out before harvest begins in January. Looking at exports, inspections last week were 21.7 MB and below the pace needed to reach USDA’s projection of 2.060 BB. For the past few weeks, Argentina has been a buyer of U.S. soybeans that are probably headed to China. In other developments, harvest is 23 percent done, slightly above the average of 20 percent. Last week, the funds reeled in their shorts reducing them 65 MB to 575 MB.
Although there are production shortages in the Black Sea Region and Australia, wheat futures are being hampered because of sluggish exports. Inspections last week were 13.5 MB and below the average needed to reach USDA’s projection of 1.025 BB. Currently, shipments are on track for 772 MB. Meanwhile, planting is progressing at 43 percent complete, slightly above the average of 40 percent. Looking at the funds, they have been inactive and are short a token 190 MB.
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