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Corn continues to be plagued from elevated ending stocks. Even though the USDA lowered their estimate to 2.131 BB in the last crop report, it is the highest since 2019. The short position of the funds reached 1.120 BB a couple of weeks ago, but they have since reduced it to 895 MB. They may cover additional shorts before year end but also might be content holding their existing position. While the USDA has raised their export estimate to 2.1 BB, reaching it could be problematic. Last week, inspections were modest at 28.0 MB and below the average of 45.7 MB that must be shipped each week to meet USDA’s target. Only on one occasion since the marketing year began in September has 45.0 MB been shipped. The bottom line in corn is that exports must pick up quickly to attract bullish interest.
The flame caused by the media coverage of varied soybean weather in Brazil has turned into a flicker. Recently, there has been an improvement in conditions, and the USDA has lowered their production estimate to 161.0 million tons. However, it is still a record. Yet, there are other factors that must be considered. One is that China’s imports have been increased 2.0 million tons. In the meantime, Brazil’s exports have also been raised 2.0 million tons while those of the U.S. remain unchanged. This is a clear sign that Brazil will get China’s increased business. Looking at exports, inspection last week at 36.1 MB were below the previous week with China taking 18.5 MB. Since the first week of November, the pace of shipments has declined 39.0 percent while those to China have fallen 59.0 percent. During the past four weeks, our exports have averaged 47.2 MB, which is 27.8 percent below the five-year average for this time of the year. The bottom line is that a wake-up call may be around the corner once the passion with Brazil’s weather passes.
Wheat ran into a headwind early this week as the buying spree by China might be over. As mentioned before, they are not a consistent buyer of U.S. wheat. Looking at exports, inspections last week were ho-hum at 10.3 MB, and below the average of 16.3 MB that must be shipped weekly to reach USDA’s projection of 725 MB. Be aware that since the marketing year began in June, there have only been two occasions that we have exceeded this level. The bottom line is that while we are getting closer to an important low, the fundamentals may not be there, just yet.
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