On The Money Grain Commentary 12-7-23

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Corn Outlook:

Corn has gotten a boost recently from an uptick in the export pace and the rally in wheat. However, it has a long way to go to whet bullish interest because of elevated stocks. Last week, export inspections were impressive, setting a marketing year high of 45.5 MB. Meanwhile, we must ship 44.6 MB each week to meet USDA’s target of 2.156 BB which will be a formidable task. For the past four weeks, our exports have averaged 26.8 MB, which is 15.8 percent below the five-year average of 31.8 MB. That said, we have our work cut out to reach USDA’s target. In the meantime, the funds are short 1.1BB which is their largest position in over a year. This could offer support if they opt to cover going into the year end.

Bean Outlook

Weather in Brazil has been the focal point in soybeans the past several weeks, but conditions are improving which has prompted the funds to lighten their long position. During the past two weeks, they have trimmed their longs 120 MB bringing them down to 175 MB. Meanwhile, exports are struggling. Last week, inspections fell to 40.7 MB with China taking 15.0 MB. Since the first week of November, the overall pace of shipments has fallen 31.0 percent while shipments to China have declined 51.2 percent. For the past four weeks, shipments have averaged 53.5 MB, which is 20.9 percent below the five-year average of 67.6 MB. The bottom line in soybeans is that if weather in Brazil is becoming less of a factor, exports will have a difficult time in carrying the load.

Wheat Outlook:

Wheat is underpinned from three sales reported to China this week and the funds covering short positions. Be aware that China is not a consistent buyer of our wheat, but their purchases are certainly getting attention. Meanwhile, as of last week, the funds were short a staggering 580 MB, their largest position since April 2019. Looking at exports, inspections last week were a token 6.9 MB and below the average of 15.1 MB that must be shipped weekly to meet USDA’s projection of 700 MB. For the past four weeks, shipments have averaged 9.4 MB, which is 16.0 percent below the five-year average of 11.2 MB. The bottom line in wheat is that once fund short covering is finished, China must continue to show interest, or additional gains may not be easily attained.
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