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The price action in corn this month has been as exciting as watching a snail’s race. However, there is a bright spot in that the export pace has been rising since late November. Last week, inspections exceeded the previous week at 37.2 MB. The downside is that shipments must average 45.9 MB each week for the remainder of the marketing year to meet USDA’s projection of 2.1 BB. So far this season, our largest shipment has been 45.5 MB, which implies that reaching their target will be a challenge. Keep in mind that Brazil displaced the U.S. as the world’s leading exporter of corn in 2022, and it will be difficult to regain that status.
The weather forecast in Brazil is expected to improve the rest of the month which will likely alleviate crop concerns in Brazil. Be aware that the lowest estimate for their soybean production is 157.0 million tons, which is just below last year’s record of 158.0 million. If weather concerns have largely passed, exports will have to pick up the pace to maintain bullish interest. Last week, inspections exceeded the previous week at 51.8 MB with China taking 16.0 MB. However, since peaking in early November, overall shipments have fallen 41.4 percent while those to China have declined 67.4 percent. For the past four weeks, the average shipment has been 45.4 MB, which is 28.0 percent below the average of 63.2 MB for this time of the year. The bottom line in soybeans is that unless Brazil’s production falls below 157.0 million tons, lower values are likely.
Recent moisture received in the southern Plains, and the forecast for snow over the Christmas holidays may keep a lid on wheat. However, increased attacks in the Red Sea by Houthi forces, an Iranian backed militia group, is keeping nerves on edge. Meanwhile, exports have improved since mid-November, but offer no bragging rights. Last week, inspections were below the previous week at 10.4 MB and must average 16.5 MB each week for the remainder of the marketing year to reach USDA’s target of 725 MB. Only on one other occasion has there been a shipment this high. For the past four weeks, the average shipment has been 9.4 MB, which is 19.1 percent below the five-year average of 11.7 MB for this time of the year. Technically, the wheat market may be approaching a long-term bottom, but the fundamentals are not quite there yet.
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