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There may be light at the end of the tunnel for corn, but it is a long tunnel! Ending stocks are down 50 MB at 2.437 BB, but remain abundant. Global stocks are down 10.2 percent from a year ago which implies we are taking a step in the right direction, although they are baby steps. Exports need improvement as inspections last week were modest at 25.9 MB. We must ship 41.8 MB each week to reach USDA’s projection of 1.925 BB. However, the pace of shipments is up 32 percent from early November, but has a lot of catching up to do. Looking at the funds, they trimmed their short position for the third straight week to 1.010, but are not in a big hurry to cover. While corn shows a few bright spots, it will take time before we reach the end of the tunnel.
Weather in South America recently lost its appeal to the soybean bulls, as conditions are favorable in Brazil, while showers are forecast next week in some of the dry areas of Argentina. This week, the USDA bumped their ending stocks estimate 25 MB higher to 445 MB and increased global stocks for 2017-18 400,000 tons. This is a 1.7 percent increase over a year ago meaning that there will be no shortage of soybeans unless weather becomes a factor in South America. Looking at exports, inspections last week were 45.1 MB which was significantly below the previous week. Since November, the pace of shipments has fallen over 30 percent. As a result, the USDA has cut their export projection 25 MB, but increased that of Brazil and Argentina 1.0 million tons. Last week, the funds increased their long position 145 MB to 155 MB. However, for them to add to it, worsening conditions are needed in South America.
It has been a tough road for wheat with ending stocks more than ample at 960 MB and global stocks a record 268.4 million tons. This is 5.1 percent above a year ago. Exports remain lethargic with inspections last week 11.6 MB. They must average 19.0 MB each week to reach USDA’s target of 975 MB. As mentioned in previous comments, the Black Sea region is eating our lunch! This is seen by the USDA increasing their exports 2.0 million tons from November. Meanwhile, the funds pulled in the reins on their shorts last week reducing them 20 MB to 735 MB.
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