On The Money Grain Commentary 12-16-21

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Corn Outlook:

In the weeks ahead, the grains will likely face crosswinds from the fluctuation in the dollar, planned interest rate hikes by the Federal Reserve, escalation of tensions between Ukraine and Russia, and increased friction between China and Taiwan. This suggests that the direction of the grains may be influenced more from outside influences and geopolitical issues rather than fundamental factors. Meanwhile, in corn, the current interest is on South America’s weather and exports. Overall conditions in Brazil and Argentina are favorable but there are some dry spots. Unless the situation worsens, the bulls may face an uphill climb. Looking at exports, inspections last week were 31.9 MB and must average 55.2 on a weekly basis to reach USDA’s projection of 55.2 MB. China remains a prominent buyer taking 34 percent of last week’s shipments.

Bean Outlook:

For weeks, the bulls have banked on a La Nina weather event to develop in South America. So far, there are only a few areas in Brazil and Argentina that are seeing dryness. However, there is always the chance that they will expand. This means that exports may have to carry the ball. Last week, inspections were brisk at 63.4 MB with China taking 48 percent of shipments. Meanwhile, the overall pace of shipments peaked in early November and has fallen nearly 17 percent. During the same period, deliveries to China also peaked and have fallen 25 percent. Even though global stocks were lowered in the recent supply-demand report, increased dryness in South America, may be needed to stir bullish interests.

Wheat Outlook:

For few weeks, wheat has been underpinned from expectations that high export taxes in Russia will swing business to the U.S. However, that has not occurred, so far, as the USDA left Russia’s exports unchanged in the latest supply-demand report but reduced those of the U.S. by 20 MB. In addition, increases in exports were seen for Australia, E.U., and Ukraine. Long story short is that the U.S. faces plenty of competition regardless of Russia. Meanwhile, export inspections last week were nominal at 9.0 MB and must average 17.5 MB on a weekly basis to achieve USDA’s target of 840 MB. Furthermore, since August, the pace of shipments has fallen nearly 56 percent.

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