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In the weeks ahead, the focus in the grains will be on inflation possibly followed by a deep recession, weather in South America, whether the renewed Ukraine-Russia grain agreement will be upheld, the bid for acres between corn and soybeans next spring, and exports. Right now, exports, or lack of, is an immediate concern for corn. Last week, inspections were 19.0 MB, the highest in 4 weeks. However, shipments must average 46.5 MB each week to reach USDA’s projection of 2.150 BB. This means that they have a lot of catching up to do. In the meantime, the average pace of shipments is running 36.6 percent below the 5-year average. The bottom line in corn is that exports must pick up dramatically, or a threat develop in South America’s production to see a sustained advance in prices.
Soybean exports continue to be impressive but are showing signs of teetering. Last week, inspections were 68.2 MB, the lowest in 4 weeks. China took 46.8 MB, their smallest shipment since the first week of October. As mentioned in previous comments, exports tend to peak in November and, currently, there are signs of it beginning to happen. Meanwhile, in other developments, all eyes are on weather in Brazil, but there are no threats for the moment. The reporting agency, Conab, projects them to produce a record crop of 152.3 million tons. This is slightly above USDA’s latest estimate of 152.0 million tons.
Wheat may continue to struggle as the Ukraine-Russia grain agreement has been renewed allowing shipments of grain from the Black Sea Region. For weeks, U.S. exports have been pathetic, and renewing the agreement will be a headwind. Last week, inspections barely moved the needle at only 2.8 MB. You must go all the way back to 2009 to find a number this low. At present, the average pace of shipments is running 56.9 percent below the 5-year average. In other developments, the winter wheat crop improved 2-points last week to 30 percent of the crop rated in good-to-excellent condition and compares to last year’s rating of 46 percent.
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