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With harvest approaching the finish line, and ending stocks in excess of 2.1 BB, there is not much of a story to tell in corn. Varied weather conditions in Brazil have sparked some enthusiasm, but it has mostly been disappointing. In the weeks ahead, the market’s direction will be largely determined by the direction of the dollar and gyrations in soybeans. Meanwhile, looking at exports, the USDA may have been a bit optimistic when they raised their projection 50 MB in the last crop report to 2.075 BB. Last week, inspections were 23.9 MB, and well below the average of 43.6 MB that must be shipped each week to reach their target. So far this season, we have not seen a shipment that high. That said, with lethargic exports, and weather in Brazil only sparking modest interest, price gains will be limited.
The focus in soybeans is currently on one issue—weather in Brazil. While it has not been ideal, it is not going to be a failure either. One source projects that their production could be as low as 158.0 million tons. However, even at that, it will still be Brazil’s second largest crop. Meanwhile, exports have been a hot topic as China has been an active buyer the past few weeks. However, that may be changing. Export inspections last week were 61.2 MB with China taking 38.1 MB. Meanwhile, the 4-week average pace of shipments to them has cooled and declined 9.8 percent since the second week of November, which means their interest may have peaked. As mentioned in previous comments, U.S. exports generally peak in November, and fall, on average, 80 percent until the end of the marketing year. That said, should an improvement in Brazil’s weather occur, bullish sentiment will vanish.
There is not much fresh news in wheat with planting of the winter crop essentially done. The rating fell 3-points last week to 47 percent in good-to-excellent condition. However, that is above the year ago rating of 32 percent. I wish there was better news in exports, but they continue to struggle with inspections last week of 7.6 MB. We must ship 14.7 MB for the rest of the season to reach USDA’s target of 700 MB which seems like a long shot. The average 4-week pace of shipments is 5.8 MB, which is well below the 5-year average of 9.3 MB for this time of the year. The bottom line is that each year, we seem to lose additional business.
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