On The Money Grain Commentary 12-22-16

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Corn Outlook:

Many traders are already heading out and closing the book for 2016. Look for more of the same next week with the funds possibly being more active. Last week, they shed 15 MB from their short corn position reducing it to 320 MB. Export inspections were 30.2 MB and below the average needed to reach USDA’s projection of 2.225 BB. However, the pace of shipments has improved over the past four weeks. Weather in South America continues to be a factor with private sources projecting Brazil’s crop at 88.3 million tons versus USDA’s estimate of 86.5 million. Looking at 2017, the focus will be on the spring weather and planting intentions.

Bean Outlook:

The bulls are losing their enthusiasm for soybeans as weather is improving in Argentina, along with good growing conditions in Brazil. One reporting agency in South America recently revised Brazil’s crop size to 106.2 million tons. This is above the USDA’s latest estimate of 102.0 million tons. Export inspections last week were 63.6 MB and have declined for the fifth straight week. Since November, the pace of shipments has fallen 22 percent. As mentioned in a previous comment, when exports peak, they fall on average 83 percent into the end of the marketing year. The funds trimmed their long position 25 MB last week to 610 MB. This was their second week of liquidation. More selling is likely if Brazil’s crop estimate grows, especially with the potential for more planted acres in the U.S. next spring.

Wheat Outlook:

Wheat struggled this week following last week’s gains from fund short covering. Last week, they covered a whopping 130 MB of their short position reducing it to 575 MB. Export inspections were routine at 17.5 MB and below the average needed to reach USDA’s target of 975 MB. The dollar climbing to a 14-year high will keep a lid on values. Currently, the factor overhanging wheat are excessive global stocks.

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