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The January Crop Report is now history with global stockpiles being lowered 2.4 million tons to 303.1 million. This was in line with expectations. Usage was revised slightly higher. Going forward the focus will be on spring planting intentions and exports. Expectations are that soybeans will get the lion’s share of increase in acres because of higher input costs for corn. As mentioned in previous comments, a geopolitical event could come into play before the mid-term elections, as the threat of one occurring is at its greatest in decades. This could create turmoil in the global financial markets, currencies, and send interest rates higher than many expect. Looking at corn exports last week, they got a needed boost setting a marketing year high at 40.2 MB. However, more improvement is needed to reach USDA’s projection of 2.425 BB.
Much to the bull’s delight, the USDA lowered their forecast for Brazil’s soybean production 5.0 million tons to 139.0 million, and has reduced Argentina’s crop 3.0 million tons to 95.2 million. As a result, world stocks are down 6.8 million tons to 95.2 million. In the meantime, usage has been trimmed 2.1 million tons to 374.9 million, which is likely a reflection of higher prices. Weather in South America may remain a focal point a little longer, but rain is in the forecast next week. In other developments, export inspections last week were not inspiring at 33.2 MB, their lowest since late September. Since early November, the pace of shipments has fallen 42 percent, while deliveries to China have declined 53 percent during the same period. Once South America’s harvest is in full swing, and with exports struggling, the bulls may need additional positive input to support their convictions.
News in wheat is mostly sparse with traders keeping an eye on tensions between Russia and Ukraine. Conditions are dry in the southern Plains, but that has not sparked much interest. World stockpiles have rebounded 1.8 million tons to 280 million which does not offer a great deal of encouragement for the bulls. In the meantime, exports are not very inspiring with inspections last week only 8.5 MB. Since August, the pace of shipments has fallen nearly 59 percent because of the rising dollar.
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