On The Money Grain Commentary 12-30-15

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Corn Outlook:

Grain traders and producers are saying good riddance to 2015 and hope that 2016 will ring in greater opportunity.  One thing that we know is next year offers plenty of uncertainty–weather, the presidential election, the economy, and possible geopolitical events, all of which could impact the grains.  Looking at corn, exports are sluggish, which will likely continue as Argentina offers competition because of the elimination of their export tax.  Inspections last week were 22.4 MB and must average 39.7 MB each week to reach USDA’s target of 1.750 BB.  At the current pace, shipments could fall 200 MB below their target.  In other developments, after two weeks of liquidation by the funds, the bears returned adding 200 MB to their shorts increasing them to 625 MB.  While 2015 is coming to a close, 2016 will be facing its share of headwinds.


Bean Outlook:

There are a few concerns regarding dry conditions in northern Mato Grossa, but they appear to be taking a backseat to favorable weather in Rio Grande do Sol and Parana.  Currently, the USDA projects Brazil’s production at 100.0 million tons, but I would not be surprised if they trimmed their estimate slightly in the crop report on January 12th as 43 percent of Mato Grossa’s crop is rated in poor condition.  Export inspections last week were respectable at 51.5 MB with China taking 28.3 MB or 55 percent of shipments.  However, shipments peaked in early November and have since fallen 34 percent.  As I have mentioned in previous comments, the pace of shipments falls on average 85 percent by the time the marketing year ends.  The funds were inactive last week as their short position stood unchanged at 370 MB.  In the weeks ahead the focus in soybeans will be on the January 12th Crop Report and weather in South America.


Wheat Outlook:

After falling for nearly a week, wheat mustered support from the recent winter storm in the Plains and flooding in areas of the Midwest.  The fact of the matter is that the market was severely oversold and looking for a reason to bounce.  However, the chances are that it may not travel very far because of lackluster exports, and increased competition from Argentina stemming from the elimination of their export tax.  Inspections last week were dreary at 11.2 MB and must average 16.0 MB each week to achieve USDA’s target of 800 MB.  Currently, shipments are on track to fall 50 MB below their projection.  In other developments, the funds added 85 MB to their short position increasing it to 530 MB.  Right now, world stocks are abundant and unless a production shortfall arises, wheat will continue to meet a headwind.


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