On The Money Grain Commentary 2-10-22

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Corn Outlook:

A smaller crop forecast in South America is keeping the bulls energized. This week, the USDA lowered Brazil’s corn production 1.0 million tons to 114.0 million but left Argentina unchanged at 54.0 million. Additional cuts are expected with a worst-case scenario likely being factored into values. In other matters, export inspections last week were 41.6 MB, slightly above the previous week. While the overall pace of shipments has been rising the past several weeks, there was a downtick in the rate of deliveries to China last week. Meanwhile, be aware that the combined long position of the trend following and index funds has risen to its highest point since last May. It was not long afterward that prices fell 37 percent. Every bull should take note of this.

Bean Outlook:

Bullish euphoria continues to surge in soybeans because of dryness in South America. As a result, the combined long position of the trend following and index funds has reached its highest mark since last April. Be aware that shortly afterward, the market went into a tailspin and lost 30 percent of its value. This should act as a stark reminder to the bulls as to what can happen when the party ends. Meanwhile, USDA has lowered Brazil’s crop 5.0 million tons to 134.0 million and reduced Argentina’s production 1.5 million to 45.0 million. More cuts are expected. In the meantime, China’s imports have been reduced 3.0 million tons, a fact the bulls may be overlooking. In other matters, export inspections last week fell below the previous week at 44.7 MB. China took 28.1 MB, or 62 percent of shipments. Shipments to China have picked up the past couple of weeks.

Wheat Outlook:

Other than dryness in portions of the southern Plains, wheat does not have much of a story to tell and seems content to watch the other grains. USDA has lowered their global stocks estimate 1.8 million tons because of a slight increase in usage. Last week, export inspections rose slightly above the previous week at 15.3 MB.

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