On The Money Grain Commentary 3-2-17

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Corn Outlook:

News in the grains is much like cell phone reception in that occasionally we hit dead spots, like when the markets are quiet in late winter. However, it was not that way Tuesday when rumors flew that President Trump may sign an executive order to retool the mandate for ethanol and biofuels. While this is being denied by the White House, it would certainly boost demand for corn if signed. In the meantime, we are entering a period when the funds tend to build a long position heading into the growing season. Last week, they increased their longs by a modest 5 MB to 405 MB, but will likely bump it higher in the weeks ahead. Looking at exports, inspections were solid last week at 57.5 MB, the third highest for the season. This was the fifth consecutive week that the pace of shipments has improved.

Bean Outlook:

Soybeans traders are hopeful that President Trump will sign an executive order to retool the mandate for biofuels and curb biodiesel imports from Argentina. This would be a big plus for demand. Next week, the USDA will release the supply-demand report in which only minor adjustments are expected in usage. However, production estimates in Brazil will be scrutinized closely because of recent increases in private estimates. USDA’s current projection for the crop in Brazil is 104.0 million tons. Meanwhile, the biggest mover and shaker for the market will be the Planting Intentions Report on March 31st. USDA’s forecast in the Ag Outlook forum is a record 88.0 million acres. In other news, export inspections last week were shabby at 25.9 MB, the second lowest for the marketing season. Since November, the pace of shipments has fallen 58 percent. Looking at the funds, they shed 85 MB from their longs last week reducing them to 650 MB.

Wheat Outlook:

Warm conditions in February are bringing the wheat crop out of dormancy early. I am hearing several reports of the crop jointing which could create a problem if “old man winter” decides to flex his muscles before spring officially arrives. Although reduced plantings are supportive longer-term, abundant global stocks offer resistance. Looking at exports, shipments have improved recently, but inspections last week at 19.7 MB were below the average needed to reach USDA’s projection of 1.025 BB. In other developments, the funds reduced their shorts 65 MB last week to 240 MB.

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