On The Money Grain Commentary 11-27-19

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Corn Outlook:

Corn demand has perked up recently, but it faces a long road in bringing the bulls back. Export inspections last week were the third highest of the season at 23.8 MB. However, they were below the average of 40.7 MB needed each week to reach USDA’s target of 1.850 BB. Even with a 25 percent increase in shipments since October, exports are only on track to reach 1.038 BB. Meanwhile, feed consumption will get a boost as cattle placed on feed are 10 percent more than a year ago. Looking at harvest, it has a way to go at 84 percent complete versus the average of 96 percent. Meanwhile, Michigan is running 27 percent below its average, Minnesota 11 percent, North Dakota 61 percent, South Dakota, 28 percent, and Wisconsin 28 percent. This accounts for 5.1 million acres that may not get harvested until early spring.

Bean Outlook:

Soybeans have been under pressure the past few weeks even though exports continue to hold up. This is largely because negotiations in the Phase I trade agreement with China have yet to be finalized, in addition to expectations for a record crop in Brazil. Seventy-nine percent of their crop is planted which is in line with the average. Meanwhile, weather is mostly non-threatening. Exports remain firm with inspections last week a marketing year high of 71.3 MB. China took 42.2 MB or 59 percent of the shipments. However, be aware that exports tend to peak in November, especially if there are no crop issues in South America. In other developments, the Midwest harvest is winding down at 94 percent complete compared to the average of 97 percent. Look for the focus in soybeans to key on developments between the U.S. and China. There is optimism that a deal could be signed by mid-December, but it would not be surprising if it is not until 2020.

Wheat Outlook:

Dry conditions in Australia and eastern Europe continues to underpin wheat, but the market must still contend with record global stocks and U.S. ending stocks in excess of 1.0 BB. Meanwhile, exports are running 22 percent above a year ago. However, the pace is short of reaching USDA’s projection of 950 MB. Inspections last week were 15.4 MB and below the average of 18.3 MB needed to achieve their target. Currently, we are on track for 875 MB. In other developments, the crop rating for winter wheat remained unchanged at 52 percent in good-to-excellent condition and compares to 55 percent a year ago.

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