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Corn Outlook:
The U.S. election has finally passed, and Donald Trump becoming the President points to a stronger dollar, and potential tariffs that could impact grain exports. However, the specifics of his agenda might not be known until he takes office in January. In the meantime, conditions in South America are favorable with no threats on the horizon. However, it is doubtful that we will escape a scare at some point during the growing season. Meanwhile, looking at exports, Mexico has been busy the past few weeks purchasing U.S. corn. While this offers optimism, shipments are not yet up to speed to reach USDA’s target of 2.325 BB. Last week, inspections were 30.6 MB and below the average of 47.2 MB that must be shipped weekly to meet their projection. The bottom line in corn is that exports must improve, especially if South America produces a normal crop, or the upside price potential will be limited.
Bean Outlook
Now that soybean harvest is wrapping up, all eyes will be on the weather in South America this fall and winter, U.S. exports, and Trump’s plan for potential tariffs against China. As it stands now, unless a mishap arises during the growing season in Brazil, they could be on track to produce another record crop. If so, China will be less reliant on the U.S. for sourcing their needs regardless of whether tariffs are imposed. This is a trend that is likely to continue in the years ahead. Looking at exports, inspections last week were 79.3 MB with China taking 51.4 MB. However, once the crop is planted in Brazil, China’s interest will turn to them. This usually occurs by the second week of November, but it may be later because of Brazil’s late start in planting. The bottom line in soybeans is that ending stocks are their third largest in history, and if Brazil produces another record crop, it will be difficult to sustain price gains.
Wheat Outlook:
Winter wheat planting is winding down at 87 percent complete with 41 percent of the crop reported in good-to-excellent condition, an improvement of 3 percent from last week. This is below the 10-year average of 50 percent. Normally, a rating this low would spark a rally, but consideration must be given that the ratings are more important in the spring when the crop comes out of dormancy. Looking at exports, inspections last week were a marketing year low of 7.1 MB and must average 15.5 MB each week to meet USDA’s target of 825 MB. The bottom line in wheat is that the crop is off to a bad start, but an additional catalyst may be needed to cause the funds to cover their shorts.
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