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The fundamentals in corn are improving as stocks are getting tighter. However, the funds are sporting their largest long position since 2010 which means the bulls are fully committed. With a position of this magnitude, disappointing news will not be tolerated. USDA left their ending stocks estimate for corn in the December Supply-Demand Report unchanged at 1.702 BB. Exports were also unchanged at 2.65 BB. Meanwhile, global stocks fell 2.4 million tons 289 million, their lowest since 2014. China’s imports were raised 3.5 million tons to 16.5 million. Some are expecting them to import 22-30 million tons. Right now, it is difficult to find someone not bullish which is troubling.
Sales to China have largely been absent the past 3 weeks which has caused profit taking in soybeans. Shipments to them peaked during the first week of November and have fallen nearly 6 percent. With improving crop conditions in Brazil, their focus could turn more to South America. In the December Supply-Demand Report, the USDA lowered ending stocks 15 MB to 175 MB. Traders thought that it might be more. No changes were made to exports leaving them at 2.200 BB. Meanwhile, global stocks fell 900,000 tons to 85.6 million. China’s imports remained unchanged at 100 million tons. Overall, the report was slightly disappointing.
The wheat crop has gone into dormancy, but the market is coming to life from reports that Russia intends to implement measures to control food inflation through increased taxes or quotas. This could give U.S. exports a much-needed lift. In the December Supply-Demand Report, the USDA lowered ending stocks 15 MB to 862 million. This came from exports being raised 15 MB to 985 MB. What came as a surprise is that world stockpiles fell 4.0 million tons to 316.5 million because on an increase in feed consumption. This is supportive as stocks appear to have peaked.
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