On The Money Grain Commentary 12-4-14

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Corn Outlook:

With harvest complete, the corn market does not have much of a story to tell until the planters are pulled out of the shed next spring.  A record crop is in the bin that will be tough to pry out of producers hands until they deliver on their contracts after the first of the year.  Currently, most eyes are on the energy sector as lower gasoline prices could crimp ethanol demand.  Another troubling factor is the stronger dollar curtailing exports.  Inspections last week were 29.2 MB and below the average needed to reach USDA’s projection of 1.750 BB.  One more issue that could come into play is that the trend following funds long position has risen to 745 MB, the largest since May.  This does not bode well for stronger prices, especially when the dollar is approaching a four year high.

Bean Outlook:

      Soybeans have lost their luster, as weather is mostly benign in South America giving rise to the potential for a record crop.  This comes on the heels of a record crop just harvested in the U.S.  When you look at world stocks-to-usage standing at a record 31.5 percent, there is little reason for prices to rally unless we maintain the torrid pace of exports.  However, that may be coming to an end as inspections last week were 67.9 MB.  While not a paltry number by any means, they were considerably less than the record set a couple of weeks ago at 114.3 MB.  Furthermore, the pace of shipments saw its first down tick since the marketing season began.  Meanwhile, shipments to China were 45.4 MB, which is only about one-half of what they took a couple of weeks ago.  In other developments, the funds are short a token 15 MB.

Wheat Outlook:

In October, wheat was headed for the kill shelter.  By the first of December, this mutt would have taken first place at the national dog show.  The lack of snow cover in Russia and Ukraine protecting the crop from winter kill, in addition to talk that they may restrict exports, has been the factor supporting wheat the past several weeks.  Meanwhile, the market has cooled off this week because the dollar, at a four year high, is diminishing U.S. exports.  Inspections last week were a modest 10.0 MB and below the average needed to reach USDA’s target of 925 MB.  At the current pace, we will ship no more than 850 MB.  In other developments, the short position of the trend following fund has risen 10 MB to 180 MB.

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