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For weeks, corn has been supported from dry conditions in Argentina. As a result, the USDA lowered their estimate last week 3.0 million tons to 52.0 million. However, this is still 2.5 million tons more than last year. That said, the bulls may not be able to play the weather card much longer. Meanwhile, global demand has fallen 5.0 million tons indicating that end users are shying away from higher prices. In other developments, exports saw a needed improvement last week with inspections at 30.4 MB, their highest in four weeks. However, they must average 45.4 MB on a weekly basis to reach USDA’s projection of 1.925 BB. The problem is that we have not yet seen an inspection this high for the season.
Like corn, soybeans have been buoyed by dryness in Argentina. Last week, the USDA reduced their crop 4.0 million tons to 45.5 million. However, this is 1.6 million tons more than a year ago. Meanwhile, Brazil remains on track to produce a record crop of 153.0 million tons while world stocks are up 800,000. In the meantime, global demand is forecast to decline 1.4 million tons, while China’s imports are down 2.0 million tons. These issues suggest that the bulls will need a continuous injection of positive input to keep the rally alive in soybeans. In other developments, exports were impressive last week with inspections of 76.2 MB, the highest since mid-November. China took 47.1 MB, their most since the third week of November. While this is encouraging, keep in mind that the USDA lowered U.S. exports 55 MB, and China’s imports 2.0 million tons.
It may be a while before the bulls regain interest in wheat as winter wheat acres are projected at an eight-year high, while Russia is on tap for a record crop and exports. Meanwhile, exports got a boost last week with inspections of 11.7 MB, their highest since the first of December. However, they must average 15.1 MB to reach USDA’s target of 775 MB. This will be difficult to achieve as a shipment of this size has not been seen since the first week of October.
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