On The Money Grain Commentary 2-11-16

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Corn Outlook:

Volatility in the financial markets and fear of negative interest rates are keeping many traders sidelined in the grains. We are being led to believe that the economy is slowly improving as unemployment is reported at 4.9 percent. However, with railcar loadings down 15.7 percent for the year, and the Baltic Dry Freight Index at a record low, a much different story is being told. Meanwhile, USDA boosted 2015-16 ending stocks of corn to 1.837 BB, up 35 MB from last month. Export inspections last week were a meager 17.2 MB, and below the average shipment of 40.0 needed each week to reach USDA’s revised projection of 1.650 BB. In other developments, the funds lightened their short corn position 115 MB last week to 530 MB. Right now, there is not a great deal of news to stir the pot until the Planting Intentions Report in late March.

Bean Outlook:

Soybeans are struggling as a potential record harvest in Brazil is progressing without any glitches. As of last week, harvest stood at 10 percent complete compared to 9 percent a year ago and 8 percent for the 5-year average. Currently, the USDA projects Brazil’s production at 100 million tons, while Argentina’s crop is pegged at 58.5 million, up 1.5 million from last month. U.S. ending stocks for 2015-16 have been revised 10 MB higher to 450 MB. Export inspections last week were routine at 45.1 MB with China taking 23.7 MB or 55 percent of shipments. The pace of shipments has declined for 13 consecutive weeks. In other developments, the funds trimmed 15 MB from their short position last week reducing it to 215 MB. For the time being, it seems that a monumental development will have to occur to entice the bulls interests.

Wheat Outlook:

Wheat continues to be under the gun from favorable conditions in the southern Plains, as well as in the Black Sea region. In addition, the USDA has revised their 2015-16 ending stocks estimate 25 MB higher to 966 MB, while world stockpiles were boosted 6.2 million tons to a record 238.9 million. Domestic stocks-to-usage are literally overwhelming at 49.3 percent. Long story short, the bins are full and exports anemic. Inspections last week totaled 14.6 MB and must average 15.8 MB each week to reach USDA’s revised target of 775 MB. Meanwhile, the funds are becoming more bearish as they added a token 5 MB to their shorts last week increasing them to 550 MB. This follows a three week period of liquidation.

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