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Corn Outlook:
Traders looking for a bullish crop report in corn early this week got their nose rubbed in it when the USDA raised their yield estimate to a record 186.5 bpa, production to 17.021 BB, and ending stocks 198 MB to 2.227 BB, the third largest on record. Adding to their woes, global stocks were increased 11.7 million tons to 290.9. The bottom line is there is no shortage of supply. While feed consumption was increased 100 MB, USDA’s estimate is problematic because of the low cattle inventory. Looking at exports, inspections last week were 58.6 MB and must average weekly shipments of 63.0 MB to meet USDA’s target of 3.2 BB. While exports have been a bright spot, they show signs of peaking as the pace has declined 15.3 percent since the third week of November. Unless it picks up, we are on track for shipments of 3.0 BB. All said and done, the upside potential in corn looks limited.
Bean Outlook
The USDA did no favors for soybeans in this week’s crop report, as they left their yield estimate unchanged at 53.0 bpa, but increased ending stocks 60 MB to 350 MB, and global stocks 2.0 million tons to a record 124.4 million. Meanwhile, Brazil’s crop was raised 3.0 million tons to a record 178.5 MB. Looking at exports, inspections last week were a marketing year high of 56.2 MB with China taking 33.1 MB. This probably puts them close in fulfilling their agreement to purchase 12 million tons. Whether China makes additional purchases remains a question as the USDA lowered its estimate for U.S. exports 60 MB to 1.575 BB but raised Brazil’s projection 1.5 million tons to 114.0 million. The bottom line in soybeans is there is little fodder to feed the bulls.
Wheat Outlook:
There is little positive news for wheat as the USDA raised their ending stocks estimate this week 25 MB to 926 MB, and global stocks 3.0 million tons to 278.3 million. Meanwhile, there will be plenty of competition in exports as production has been increased for Argentina and Russia. Looking at exports, inspections last week of 11.6 MB exceeded the previous week’s marketing year low but were below the average of 16.3 MB that must be shipped weekly to meet USDA’s target of 900 MB. Currently, we are on track for shipments of 835 MB.
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