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After the release of the January Crop Report, attention will turn to planting intentions and weather this spring. Right now, expectations are that planted acres could fall nearly 2.8 million to 88.0 million. In that event, it will mark the first time that there have been fewer acres of planted corn than soybeans. However, even with fewer acres, a modest increase in exports and feed consumption, ending stocks for 2015-16 could range from 1.3-1.8 BB. In other developments, export inspections were 21.2 MB and below the average needed to reach USDA’s projection of 1.750 BB. The trend following funds lightened their long futures position by 55 MB reducing it to 910 MB. However, it is a hefty position that poses a problem in the event the crop report is bearish. Right now, expectations are it will be slightly positive.
Warm, dry conditions in portions of southern Brazil has offered support to soybeans recently. However, overall conditions are favorable with expectations for a record crop. Harvest has begun of early planted soybeans with exceptional yields being reported. Looking ahead at planting in the U.S., record plantings are expected that could top 88.0 million. If realized, ending stocks for 2015-16 could exceed 500 MB. In other developments, export inspections were 51.6 MB with China taking 35.8 MB or 69 percent of shipments. Meanwhile, shipments peaked in November and have been falling at a rate of 7.6 percent per week. The trend following funds are short 15 MB, but could flip to a long position if the January Crop Report is positive.
Wheat got a modest boost early this week because of cold, frigid conditions in the Plains and Midwest. Most of the concern was in the northern sections of the Midwest where snow cover is lacking. However, stocks remain abundant and the strength faded. Export inspections were 21.2 MB and below the average to reach USDA’s projection of 925 MB. The current pace of shipments shows that we are running 60 MB short of their target. With the dollar approaching its highest level since 2005, U.S. wheat is less competitive than other origins. After three weeks of reducing their short position, the trend following funds have increased it 15 MB to 80 MB.