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Traders are optimistic that China will import large quantities of U.S. corn to feed their expanding hog population. However, caution is recommended as the fund long position has risen to 1.550 BB, the largest since April 2010. This extreme in speculative sentiment suggests that much of the positive news may already be factored into values. Meanwhile, conditions have been dry in southern Brazil and Argentina, but recent scattered showers will relieve stress. Looking at exports, inspections last week were 35.0 MB and must average 57.7 MB on a weekly basis to reach USDA’s target of 2.650 BB. The overall pace of shipments improved for the second consecutive week which is encouraging. Right now, the main concern for corn is that although the fundamentals are improving, the pen is getting overcrowded from the growing number of bulls.
Soybeans hit a snag this week as traders woke up to the fact that new sales to China are seeing a dry spell. They have gone over 2 weeks without any reports from the USDA. In addition, scattered showers have fallen in southern Brazil with more in the forecast. Looking at export inspections last week, they were solid at 74.8 million. However, the pace of shipments has fallen the second week in a row for a decline of 7.3 percent. China took 60.1 MB last week or 80 percent of shipments. Shipments to them peaked during the first week of November but saw an uptick last week. As mentioned in an earlier comment, we are beginning to see some cracks develop in their purchases.
Wheat futures ran into a headwind this week from moisture received in the southern Plains and Russia’s consideration of expanding their export quota from 15.0 million tons to 17.5 million. Russia has been a pain in the side of U.S. exports, and it looks like it will continue. Export inspections last week were 18.4 MB and must average 19.2 MB on a weekly basis to reach USDA’s projection of 975 MB. Meanwhile, the pace of shipment has been on the upswing for the third consecutive week. In other developments, the crop rating rebounded 3-points last week to 46 percent of the crop in good-to-excellent condition.
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