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Late this week, the ag industry will get many long-awaited questions answered when the USDA releases a backlog of delayed reports resulting from the government shutdown. The usual topics of interest, such as ending stocks, world stockpiles and exports will be looked at closely. However, anything related to China may be scrutinized more because of their expressed interest in purchasing corn. For several weeks, rumors have circulated that they might purchase 2-5 million tons. Meanwhile, export inspections last week were run of the mill at 35.4 MB and below the average of 52.1 MB that must be shipped on a weekly basis to reach USDA’s target of 2.450 BB. However, the bright spot is that the pace of shipments has improved 18.8 percent since early January.
Optimism surrounding China’s recent soybean purchases may be waning. At the beginning of the trade negotiations, expectations were that they would purchase 5-8 million tons. Recently, they bought 4.2 tons and might buy another 2.0-2.5 million for summer shipment. Shipments to them have picked up the past 4 weeks averaging 9.4 MB per week. Unfortunately, it is not enough. When one looks at the big picture, the U.S.’s global share of exports has been declining. During the past 3 years, they have fallen 6.8 percent to 33.1 percent, while that of Brazil has risen 9.1 percent to 51.8 percent. While the loss of exports has most likely stabilized, once you go down that road, it is difficult to come back. Meanwhile, export inspections last week were 35.8 MB and below the average of 37.0 MB needed to be shipped each week to reach USDA’s projection of 1.9 MB. However, shipments have risen 38 percent since January because of China’s purchases. Meanwhile, if they back away, USDA’s target will be in jeopardy.
There is not much fresh news in wheat. In the USDA report released late this week, traders will look mostly at wheat seedings, global stockpiles, and export estimates in the Black Sea Region. Meanwhile, weather in southern Europe, Ukraine, and Russia is favorable for the crop although snow cover is diminishing. Looking at exports, inspections last week were 16.1 MB, well below the average of 26.7 MB that need to be shipped each week to reach USDA’s target of 1.0 BB. Currently, we are on track to ship 835 MB.
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