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Elevated stocks and sluggish exports have plagued corn, pulling prices lower. Unless there is a stark change, values may continue to sink as there is little motivation for the bears to cover their short position. Last week, export inspections were a marketing year low of 16.0 MB, which is well below the average of 44.7 MB that must be shipped each week to reach USDA’s target of 2.075 BB. So far, this season, the largest shipment has been 26.0 MB which puts their projection in jeopardy. Right now, the average shipment during the past four weeks has been 20.7 MB, which is 11.1 percent below the five-year average of 23.3 MB for this time of the year. The bottom line in corn is that it needs an infusion of positive news to turn it around.
The bulls continue to be captivated by weather in Brazil. One source has lowered the size of their soybean crop to 161.4 million tons while another puts it at 158.0 million which would tie last year’s record. Meanwhile, what is being overlooked is the decline in exports. Last week, inspections were below the previous week at 53.0 MB with China taking 32.0 MB. However, since the first week of November, overall shipments have fallen 19.4 percent while exports to China have declined 34.4 percent. During the past four weeks, the average shipment has been 62.5 MB, which is 13.4 percent below the five-year average of 72.1 MB for this time of the year. As mentioned in previous comments, when exports peak, they generally decline 80 percent through the end of the marketing year. That said, when the passion in Brazil’s weather passes, export may offer little support.
Wheat remains in a downtrend as the bears have seen little reason to abandon their short position. The rating of the winter crop has risen the past couple of weeks to 50 percent in good-to-excellent condition, up 2 points from last week, and is above last year’s rating of 34 percent. Furthermore, exports are dismal with inspections last week of only 10.1 MB. They must average 14.8 MB each week if USDA’s projection of 700 MB is to be reached. For the past four weeks, the average shipment has been 8.3 MB, which is 21.7 percent below the average of 10.7 MB for this time of the year. While the outlook for wheat seems gloomy, talks of Ukraine becoming a member of NATO could spark additional aggression by Russia which, in turn, could cause the bears to cover shorts.
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