On The Money Grain Commentary 1-6-22

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Corn Outlook:

Ag has a lot on its plate that will likely set the tone for the grains in 2022. Currently, the focus is on weather in South America, but that will eventually pass. Afterward, attention will be on the tug of war for acres between corn and soybeans this spring. Meanwhile, the 2020 trade agreement with China has expired which leaves exports to them hanging in the balance. In addition, the alliance between Russia and China is becoming stronger. Do not be surprised if China challenges the U.S. for world dominance by the midterm elections. How the Biden Administration responds will have a profound impact on the global markets. In other matters, export inspections in corn last week were 23.4 MB. Since mid-December the pace of shipments has fallen 6.2 percent and should raise some eyebrows as the dollar looks like it will continue higher.

Bean Outlook:

Dryness in southern Brazil continues to be the hot topic of discussion in soybeans. Recent scattered showers may not have been enough to dampen bullish convictions. Meanwhile, private sources have cut Brazil’s production to 138.0-133.4 million tons. This would still be their second or third highest production. The crop report on January 12th may shed additional light. It will have to be bullish to sustain further gains. Once weather concerns pass, the focus will be upon planting intentions this spring and exports. As far as acres go, a considerable increase in soybeans is likely considering current price levels. In the meantime, exports are on the downswing. Inspections last week were 43.7 MB. Since early November, the pace of shipments has declined 33.7 percent. As mentioned in previous comments, the average decline until the end of the marketing year is between 65-85 percent. The pace of shipments to China has fallen 49.4 percent during the same period.

Wheat Outlook:

Wheat has had a tough time finding traction even though there are dry spots in the southern Plains. The likely culprit is that the dollar is in an uptrend, and exports are disappointing. Last week, inspections were at the bottom of the barrel at 5.2 MB. We must ship 18.8 MB each week to reach USDA’s target of 840 MB, and a shipment of that size has not been seen since late September.

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