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Corn harvest is mostly done with the combines either headed back or already parked in the shed. However, it is a different story in the upper Midwest with 4.0 million acres or 670 MB still in the field. North Dakota is only 43 percent complete with their harvest. In most situations, this would wave a red flag in front of the bulls. However, that has not been the case this time as it appears they will need a hard, swift kick in the rump to get their attention. Their lack of interest is largely because of shoddy exports. So far this season, shipments are running 57 percent below a year ago. Last week, inspections were mediocre at 18.2 MB. What is discouraging is that the pace of shipments was on the upswing for four weeks but has dropped off again.
The news in soybeans continues to center around China and the U.S. getting Phase I of the trade deal signed. The December 15th deadline is approaching when additional tariffs are scheduled to be levied against China. However, there are rumors that U.S. negotiators are willing to cut existing tariffs on Chinese goods by 50 percent and drop new tariffs in exchange for a deal. Meanwhile, Brazil’s crop is 93 percent planted with record production expected. Usually, China’s focus turns to South America when Brazil’s planting is nearly done. Last week, export inspections were solid at 48.7 MB with China taking 30.5 MB. However, this is a decline of 28 percent from what they took a couple of weeks ago. Maybe this is a sign that the bulk of their purchases from the U.S. are in the rear-view mirror. Keep in mind that a great deal of optimism and emotional energy hinges on a trade deal and prices could deflate once there is an announcement.
While wheat rebounded this week, it must contend with near record world stocks and a domestic supply that amounts to 5.5 months. Export inspections last week were mediocre at 11.5 MB but above the marketing year low of 9.0 MB the previous week. The problem wheat faces remains the same, intense global competition. This is reflected in Egypt’s recent purchase of 335,000 tons from Russia, Romania, Ukraine, and France. Since late October, the pace of shipments has fallen 28 percent which makes it difficult to justify USDA’s recent 25 MB increase in exports to 975 MB.
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