On The Money Grain Commentary 3-1-18

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Corn Outlook:

Drought type conditions in Argentina continues to be the main talking point among the ag circles. Private sources are estimating their corn production at 35-38 million tons compared to the USDA’s forecast of 39.0 million. Concerns will remain until mid-March as they are in the critical stage of development. Afterward, the focus will turn to the Midwest and spring weather. Right now, the western Corn Belt is getting a lot of attention because of dryness. In other developments, export inspections last week were a marketing year high of 51.4 MB. Although they have improved recently, there is a lot catching up to do to reach USDA’s target of 2.050 BB. Looking at the funds, they have become more aggressive and increased their longs 160 MB to 215 MB.

Bean Outlook:

Soybeans in Argentina are currently in their most critical stage of development with sources rating 75-80 percent of their crop in average to poor condition. Private estimates put their crop at 46.5-48.0 million tons compared to the USDA’s forecast of 54.0 million. While this could support the market a while longer, a good part of the positive news is already factored into values. Be aware of one source projecting Brazil’s crop at a record 117.5 million tons versus 114.1 million by the USDA. In other developments, export inspections last week were a marketing year low of 27.9 MB. Since peaking in November, the pace of shipments has fallen 55 percent and, if we follow the norm, they will likely decline to 85 percent by the time the marketing year ends. Looking at the funds, they were active last week increasing the long position 270 MB to 330 MB.

Wheat Outlook:

Dryness in the southern Plains continues to take a toll on winter wheat. Only 12 percent of the Kansas crop is rated in good-to-excellent condition with Oklahoma at 4 percent. Rain will be needed when the crop breaks dormancy, but little is in the forecast for the next 10 days. Export inspections last week were uninspiring at 10.2 MB which caused a downtick in the pace of shipments. As of last week, the funds were short 415 MB. However, this week’s gains imply that they have probably blown out of most of their position.

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