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The corn market for most of December has been like getting through a dead space on your cell phone in that not much is happening. There is little cash movement as producers are holding tight onto their crop in the bin. Next month, they will begin checking input costs and profit margins for spring planting, which currently offer little incentive. Regarding exports, there is a lot of room for improvement as shipments are running 41 percent behind a year ago. Last week, inspections were only 23.8 MB and must average 42.2 MB each week to reach USDA’s target of 1.925 BB. Looking at the funds they upped the ante by increasing their shorts 180 MB to 1.190 BB. For the moment, there is little to shake their resolve meaning the chances are it will be January, maybe later, before the corn market gets through its dead space.
Concerns of La Nina impacting South America’s soybean crop are far from everyone’s mind as reflected by the market’s thrashing this week. However, their crop is in the early stages of development and emotions could heat up again on the first sign of dryness returning. Looking at exports, inspections last week were respectable at 65.4 MB. However, the pace of shipments has been declining since November and are down 34 percent. China took 42.5 MB or 64 percent of shipments. As mentioned in previous comments, when soybean shipments peak, they decline on average 85 percent until the end of the marketing year. For the past few weeks, the funds have been flip-flopping on their position. Last week, they sold 195 MB and are now short 40 MB.
Wheat reminds me of the practical joker who sits in the back of the class that, once in a while, gets a passing grade. Wheat has the most bearish fundamental of the grains, but has shown the brightest performance recently. This is mostly because of dry conditions in the Plains over the past few weeks. Exports are showing some improvement with inspections last week at 21.5 MB, the best seen since September. Although the pace of shipments has improved since early November, they must grow further if we are to reach USDA’s projection of 975 MB. Looking at the funds, they added 160 MB to their short position last week increasing it to 845 MB, just short of the record of 945 MB. This could be a boon for the market if they are forced to cover.
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