On The Money Grain Commentary 12-23-21

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Corn Outlook:

Normal trading conditions should return after the first of the year following the holidays. The focus will then be on the January Crop Report, production prospects in South America, and producer planting intentions for 2022. However, outside influences, such as geopolitical issues, may have a greater influence on the grains than the fundamentals. China and Russia are currently flexing their muscles for world dominance. I would not be surprised if China challenges the U.S.’s leadership to diminish its reliability among its allies. This could have a profound impact on the dollar as the world reserve currency, as well as interest rates. Looking at corn, export inspections last week were a marketing year high at 39.4 MB with China taking 22 percent of shipments. However, this is a far cry from 55.5 MB that must be shipped each week to reach USDA’s projection of 2.500 BB.

Bean Outlook:

Soybeans are being supported from growing concerns of dry conditions in southern Brazil and portions of Argentina causing a shortfall in production. For several weeks, the bulls have been chomping at the bit for a weather market to develop because of La Nina. While southern Brazil is seeing stressful conditions, the central and northern sections are not experiencing problems for the moment. Looking at exports, they saw a downtick last week at 61.7 MB with China taking 56 percent of shipments. However, the pace has been declining since early November and is down 16 percent. Meanwhile, shipments to China are down 29 percent.

Wheat Outlook:

After sliding for most of last month, wheat has found support from areas of dryness in the southern Plains. In addition, Russia has announced that they will cut their export quota from 9 million tons to 8 million. However, this has been expected for some time. Meanwhile, exports remain lackluster with inspections last week at 7.7 MB. They must average 17.9 on a weekly basis to reach USDA’s target of 840 MB which seems like a tall order.

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