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With the most divisive and bitter Presidential election in American history behind us, and the November Crop Report posted in the record book, level heads in the grains will focus in the weeks ahead on what the Trump Administration offers, demand, and weather in South America. In the meantime, the corn market must cope with a 15.2 BB crop, ending stocks of 2.4 BB, plus find a way to keep values afloat. While exports year to date are 82 percent above a year ago, the bad news is that the pace has fallen 43 percent since September. Inspections last week were routine at 35.0 MB. Meanwhile, the funds have been liquidating their short position for five weeks reducing it to 265 MB as of last week. Looking ahead, unless weather becomes a factor in South America, corn prices could stay in limbo this fall and winter.
USDA’s latest balance sheet shows that we will produce at 4.3 BB crop with ending stocks of 480 MB. This is a staggering crop and implies the need for exports to remain strong. So far, cumulative shipments are running 15 percent higher than a year ago with inspections last week 96.4 MB. However, as mentioned in last week’s comments, soybean exports have a strong tendency to peak once the crop in Brazil is planted. As of last week, their crop was 52 percent planted versus the average of 49 percent. Be aware that when exports peak, the average decline in shipments is 83 percent in a range from 63-96 percent. In the meantime, the funds have been adding to their longs for five consecutive weeks. Last week, they boosted their longs 105 MB to 510 MB. This will be a difficult position for them to maintain if exports peak in line with the norm and South American weather does not become a major factor.
Wheat does not have much of a story to tell. Global stocks are abundant with U.S. ending stocks at 1.143 BB. Exports have been mundane since mid-October with inspections last week at 18.1 MB. However, for the first time in five weeks, there was an uptick in the pace of shipments, but it may only be a fleeting moment. Planting is winding down at 91 percent done with the rating remaining unchanged at 58 percent of the crop in good-to-excellent condition compared to 51 percent a year ago. In other developments, the funds trimmed 50 MB from their short position last week reducing it to 650 MB.
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