On The Money Grain Commentary 1-14-21

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Corn Outlook:

Enjoy the ride while it lasts! The USDA gave the bulls another portion of grain when they lowered their ending stocks estimate of corn to 1.552 BB in their latest report, and world stocks to 283.8 million tons. This is the smallest global stockpile since 2016. While China’s imports rose 1.0 million tons, U.S. exports were lowered 100 MB with feed usage and ethanol down 50 MB and 100 MB respectively. Exports may fall further as the dollar is attempting to post an important bottom. While inspections were a marketing year high last week at 44.5 MB, they must average 57.9 MB to reach USDA’s target of 2.550 BB. Right now, the traditional funds are sporting a record long position in corn of 1.980 BB. Meanwhile, the index, or institutional funds, are long 2.045 BB, their largest position since 2014. Although the funds can take the grains to unprecedented heights, only the heartache is remembered when they depart!

Bean Outlook:

With ending stocks of soybeans at 140 MB, we are looking at the smallest stockpile since 2013. World stocks at 84.3 million tons are their lowest since 2014. In their latest report, the USDA increased their export estimate 30 MB to 2.230 BB which was expected. Meanwhile, no increases were noted for imports by China. Last week, export inspections rebounded to 65.5 MB. However, since mid-November, the pace has fallen 25.5 percent. In the meantime, the pace of shipments to China has declined 40.6 percent. This suggests that the USDA may be reluctant to make additional increases in subsequent reports. While all eyes have been on South America’s weather, conditions are improving from recent moisture and more is in the forecast. In their recent report, the USDA left Brazils’ production unchanged at 133.0 million tons but lowered Argentina’s crop 2.0 million to 48.0 million tons. Right now, the funds are long 825 MB of soybeans. With the record of 2.225 BB set in 2012, they have a bit of wiggle room in tacking on additional longs.

Wheat Outlook:

While the USDA pegs global wheat stocks falling 3.3 million tons to 313.2 million, it is still the second largest on record. This means that it will have to be pulled higher by gains in corn and soybeans. Meanwhile, there is a bright spot in that Russia’s exports are forecast to fall 1.0 million tons. In addition, there are rumors that they will increase exports quotas further. Last week, export inspections were scraping the barrel at 10.2 MB and must average 21.1 MB to reach USDA’s projection of 985 MB.

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