On The Money Grain Commentary 12-9-21

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Corn Outlook:

Fundamental factors in the grains seem to be taking a backseat to outside influences. This stems from the Federal Reserve’s intention to taper asset purchases after a decade of accommodation, Russia’s buildup of troops at the Ukrainian border, and the escalation of growth in China’s military, weapons technology, and artificial intelligence. The later should not be taken lightly as China is a growing threat to the U.S.’s credibility among its allies, and the dollar remaining the world reserve currency. All these issues could have a major impact on grains down the road. In the monthly crop report, USDA projects ending stocks of corn at 1.493 BB, unchanged from November. Meanwhile, world stocks rose 1.1 million tons to 305.5 million. No production changes were made in Brazil and Argentina, but increases were noted in the E.U. and Ukraine.

Bean Outlook:

The focus in soybeans remains on weather in South America and exports. Overall, conditions in Brazil and Argentina are favorable, although there are some dry spots that will likely threaten yields in those areas. While exports are strong, shipments peaked in early November and have fallen 12 percent. During the same period, deliveries to China have declined 18 percent. Looking at the crop report, USDA projects ending stocks at 340 MB, unchanged from last month. Meanwhile, world stocks are forecast to decline 1.8 million tons to 102.0 million. No changes were made in production for Brazil and Argentina. Overall, there is nothing in the report for either the bulls or the bears.

Wheat Outlook:

Wheat has run into a headwind because of the rising dollar and Egypt continuing to purchase from Romania, Russia, and Ukraine. Meanwhile, tensions between Russia and Ukraine are being monitored closely. In the monthly crop report, USDA projects ending stocks at 598 MB, up 15 MB from November. This mostly came from exports being lowered 20 MB. Meanwhile, world stocks are forecast to rise 2.4 million tons to 278.2 million which exceeded the highest trade estimate. The rise in global stocks was the result of production increases in Australia, Canada, the E.U., and Russia.

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