On The Money Grain Commentary 12-7-17

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Corn Outlook:

For the second week in a row, the funds have been in a liquidation mode reducing their short position in corn to 1.155 BB. While this may offer optimism to the bottom pickers, the funds remain in their comfort zone. Currently, traders have their radar zeroed in on weather in South America. Conditions are favorable there now, but some areas of dryness exist in Argentina that are of concern. Meanwhile, rumors circulate that China is interested in U.S. corn, but exports remain lethargic with inspections last week at 23.0 MB. However, there may be a bright spot in that there was an uptick in the pace of shipments, the first seen since late October. Looking ahead, the holidays are before us and interest in the market may not pick up until the new year.

Bean Outlook:

Traders are fixed on the much discussed La Nina event in South America, and banking that it will impact soybean production. While scattered showers are forecast in Argentina late this week, warmer temperatures are on tap next week. Last week, the funds bought 80 MB and are now long a token 10 MB meaning there is plenty of room to add to their position if a situation occurs. Exports were strong with inspections at 66.1 MB. However, the pace of shipments has fallen nearly 21 percent since peaking in November. On average, they fall 85 percent until the end of the marketing year. China took 41.7 MB or 63 percent of shipments. Meanwhile, their pace of shipments has declined 45 percent in a five-week period. While speculators are betting on La Nina impacting South America’s production, keep in mind that it is only a bird in the hand at this point.

Wheat Outlook:

Wheat has shown a few signs of life at moments, but cannot seem to mount an offensive. Abundant global stocks and lagging exports are mostly the reason. Last week, inspections were 15.0 MB and must average 19.6 MB each week to reach USDA’s target of 1.0 BB. Right now, the pace is well under the target needed. The winter wheat crop is going into dormancy and traders will keep an eye on weather in the weeks ahead for freezing temperatures that could cause winterkill. Looking at the funds, they are a bit more bearish as they added 45 MB to their short position last week increasing it to 705 MB.

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