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Next week, the calendar turns to January which means the focus in corn will soon turn to spring planting, acreage estimates, and long-range weather. The current thinking is that corn may see an increase in acres. USDA’s February Ag Outlook Forum may shed more light on the possibility. In the meantime, exports are improving with last week’s inspections a marketing year high of 33.7 MB. However, they must average 47.9 MB on a weekly basis to reach USDA’s projection of 2.075 BB. That said, they have a long way to go to catch up. Unless it happens, and with cattle placements and hog inventory below a year ago, a serious production mishap will be needed in South America to sustain a long-term price advance.
While the focus in soybeans will eventually turn to planting intentions next spring, the current focus is still on weather in South America. Conditions in Brazil are favorable, and they appear to be headed for a record crop. However, there are some shortcomings in Argentina as they have only been receiving scattered showers. This, along with China relaxing their Covid-19 restrictions, has offered support. Meanwhile, I would not become overexcited about the relaxation of their restrictions bringing a surge in demand for U.S. soybeans. Last week, inspections were 64.4 MB with China taking 39.4 MB. This is their smallest shipment since mid-October. Since early November, the pace of shipments to China has fallen 37.7 percent, while our overall shipments have declined 30.2 percent. Meanwhile, supplies of new crop soybeans in Brazil will be available after mid-January which suggests China will be acquiring most of their needs from them.
The recent Artic blast in the Midwest and Plains has supported wheat, plus exports are showing signs of slight improvement. However, a great deal more improvement will be needed to reach USDA’s target of 775 MB. Last week, inspections were 10.3 MB and must average 14.3 MB each week to achieve their target. With stiff competition from Russia and the EU, it is unlikely to happen. Currently, our average pace of shipments is running 22.7 percent below the five-year average.
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