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Thanksgiving marks the beginning of the holiday season. During this time, traders begin to wind down their operation until after the new year, while grain producers start making plans and evaluate inputs for next year’s crop. Right now, the focus is squarely on South America’s weather and exports. Traders are optimistic that China will import large quantities of U.S. corn to feed the expansion of their hog herd. So far, they have made token purchases, but we have not seen the volume that many expect. Last week, export inspections were nominal at 32.7 MB and must average 49.0 MB on a weekly basis to reach USDA’s target of 2.325 BB. However, there is a bright spot in that we saw the first uptick in the pace of shipments since early October.
Soybeans continue their upward trek on the outlook for strong demand and dryness in portions of southern Brazil. However, there are some cracks showing. One is that we have gone for 12 days without a sale being reported to China. Rumors are circulating that there may be some cancellations. Meanwhile, export inspections last week were healthy at 73.8 MB, but the pace of shipments fell for the first time since the marketing year began in September. Another troubling factor is that the pace of shipments to China peaked during the first week of November and has fallen slightly over 6 percent. As I have mentioned in previous comments, soybean exports have a strong tendency to peak in November and decline through the remainder of the marketing year. This warrants keeping a close eye. Keep in mind, the fatter the bull, the bigger the feast for the bears!
Wheat still lacks a story to tell and will continue to follow the movement in corn and soybeans. Exports are lethargic with inspections last week anemic at 13.1 MB. They must average 19.2 MB each week to reach USDA’s projection of 975 MB. The pace of shipments has been declining since the last week of September and are down 47 percent. Russia continues to be our toughest competitor. In other developments, the ratings lost ground last week falling 3-points to 43 percent of the crop in good-to-excellent condition. Last year’s rating was 52 percent.
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