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Corn is attempting to climb out of a deep hole. It will be a challenge because of growing world stocks, recent showers in Brazil benefiting their safrina crop, and anemic exports. Last week, export inspections were nominal at 28.0 MB. They must average 47.5 each week for the rest of the marketing year to reach USDA’s projection of 2.1 BB. So far this season, the largest inspection has been 45.5 MB. Normally, exports peak during April-May 80 percent of the time. However, this season they appear to have peaked in late December and have been trending lower since. Although the outlook for corn does not look bright for this spring, everyone is bearish, and the funds are sporting their largest short position since June 2021. Meanwhile, commercial users are adding to their longs. That said, while we may see lower values, the bears just coming to the party may want to tread lightly.
Soybeans are in a catch-22 situation as Brazil’s production remains uncertain, but global stocks are near a record level. Furthermore, China’s economy is struggling which could put a dent in demand. Last week, export inspections were 42.6 MB with China taking 29.3 MB. For the past two weeks, shipments to them have risen, but it is probably temporary. Overall, our export pace has been on a downswing since peaking in early November, declining 51.9 percent. With expectations for soybean acres possibly rising 3.4 million this spring, the outlook does not look very promising. However, the funds are currently holding their largest short position since June 2019 suggesting that they are overextended leaving the market open for short covering.
Wheat has been resilient the past several weeks, mostly because of heightened concerns surrounding threats against shipping in the Black and Red Seas, in addition to the decline in world stocks. Meanwhile, exports are lackluster with inspections last week at 11.5 MB. They must average 17.4 MB on a weekly basis to reach USDA’s projection of 725 MB. So far this season, there has not been a weekly inspection this high which could limit recoveries.
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