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Corn Outlook:
Strong exports continue to be the factor supporting corn. In the supply-demand report this week, the USDA increased exports 125 MB to a record 3.200 BB. However, there were no increases in imports from our largest customers of Mexico, Japan, South Korea, and Southeast Asia which puts a question mark on whether USDA’s target is sustainable. Meanwhile, imports from the EU were lowered. Last week, export inspections were 57.1 MB, and below the average of 62.8 MB that must be shipped weekly to meet USDA’s projection. However, for now, we are on track to reach their target. Although ending stocks have been lowered to 2.029 BB, they are the third highest since 2016. The bottom line is that stocks are abundant, and should demand from our large customers flinch, current values will not be sustained.
Bean Outlook
Traders and grain producers are beginning to lose hope of increased soybean purchases by China. Unfortunately, the situation has become a political football. Initially, the October agreement between the Trump Administration and China was for them to purchase 12 million tons by the end of the year. However, according to Treasury Secretary Bessent, the goal line has been moved to the end of February or beyond. This is puzzling, as China’s intended purchases will come at a time when Brazil is harvesting a record crop that will be available for export. Looking at U.S. exports, inspections last week were 37.4 MB, and above the average of 30.5 MB that must be shipped weekly to meet USDA’s target of 1.635 BB. China took 4.4 MB, their first shipment since June. The bottom line is that China will likely purchase additional U.S. soybeans. However, the idea of sales to them getting back to the peak of 36.3 million tons in 2017 is wishful thinking.
Wheat Outlook:
The fundamentals of wheat are not great as the USDA has increased their global stocks estimate 3.5 million tons because of production increases in Argentina, Australia, Canada, EU, and Russia. Exports were also increased in these countries except for Russia. Meanwhile, the USDA left their export estimate for the U.S. unchanged. Last week, export inspections were 14.4 MB, and below the average of 15.9 MB that must be shipped weekly to meet USDA’s target of 900 MB. Unless they improve, the USDA may lower them as we are on track for shipments of 845 MB.
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