On The Money Grain Commentary 1-21-21

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Corn Outlook:

Global stocks of corn have been trending lower since 2016 and are their smallest since 2014. However, there is no acute shortage. Meanwhile, if you look at the traditional funds who are holding a record long position of 2.180 BB, and the index, or institutional funds, long 2.0 BB you would think that we are on the verge of running out of corn to meet existing demand. If the dollar bottoms, the sheer size of the fund longs could trip up the bulls causing values to stumble. In other developments, the pace of export shipments has picked up the past 9 weeks but were uneventful last week at 34.5 MB. They must average 58.4 MB on a weekly basis to reach USDA’s target of 2.550 BB. Meanwhile, the new Biden Administration leaves traders with many unknowns regarding trade relationships, primarily China.

Bean Outlook:

Soybeans have trended upward for several weeks but are beginning to meet a headwind from improving conditions in Brazil. Argentina is still dry, but showers are in the forecast. While the funds continue to hold a hefty, long position, they have lightened the load to 795 MB the past few weeks which is positive. Looking at exports, inspections last week saw an improvement over the previous week at 75.6 MB with China taking 45.8 MB or 60 percent of shipments. However, the overall pace of shipments has fallen 30 percent since mid-November while the pace of shipments to China is down 40 percent.

Wheat Outlook:

Global stocks of wheat remain elevated but are beginning to shrink. While the USDA projects exports at 985 MB, they are not up to speed to reach this mark. Inspections last week, were meek at 10.1 MB and must average 21.7 MB to reach their projection. The last time that we saw inspections anywhere close to this level was in October. Without a compelling story, wheat will follow corn and soybeans.

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