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Corn faces a hurdle from ample stocks, a steadfast dollar, and favorable weather in South America. The latest crop report shows ending stocks at 1.493 BB, while global stocks are up 2.7 million tons to 304.4 million. These are adequate stockpiles to meet demand. Meanwhile, exports could use a shot in the arm as inspections last week were meager at 22.1 MB. We must ship 52.6 MB on a weekly basis to reach USDA’s target of 2.5 BB. Since the third week of October, the pace of shipments has fallen nearly 14 percent which makes their projection probably a long shot. Looking at harvest, it is winding down at 84 percent complete versus 78 percent for the average. While the fundamentals for corn could be better, it seems to be getting most of its strength from gains in wheat.
Soybeans are meeting resistance from favorable weather in Brazil. While there have been concerns of La Nina developing, there are no threats on the horizon right now. There have been dry conditions in Argentina, but they have improved with recent showers. Meanwhile, because of the early dryness, the USDA has lowered their production 1.5 million tons. Looking at exports, they have been strong this season with inspections last week a marketing year high of 97.2 MB. China took 68 percent of shipments. However, unless a production scare arises in Brazil, China’s interest will soon switch from the U.S to South America. This was reflected in the crop report as exports were lowered 40 MB while Brazil saw an increase of 1.0 million tons. Although global stocks were lowered in the crop report, they remain healthy at 103.8 million tons. In other developments, harvest is beginning to wind down at 87 percent complete versus the average of 88 percent. The bottom line for soybeans is that a problem will be needed in South America to spark a rally.
Wheat continues to receive support from shrinking supplies. The recent crop report showed global stockpiles falling 1.4 million tons to 275.8 million. This is the third straight year that they have declined. In other developments, export inspections were a paltry 8.5 MB last week. Since mid-August, the pace of shipments has fallen 70 percent. As a result, the USDA has lowered their forecast 15 MB. Meanwhile, winter wheat planting is almost done at 90 percent complete with 45 percent of the crop rated in good-to-excellent condition, unchanged from the previous week, and on par with a year ago. Right now, wheat is floating the boat in the grains.
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