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Corn Outlook:
A gloomy outlook persists in corn with the bears holding the upper hand because of elevated stocks. However, many have become complacent as opinions from armchair analysts are swarming. Furthermore, the short position of the funds has grown to 1.530 BB, the highest since 2020, while end users have increased their longs to 240 MB because of difficulty in securing cash. If end users continue to add to their longs, it could eventually force the funds to cover their shorts. Looking at exports, there was an uptick last week with inspections of 34.6 MB. However, they must average 49.0 MB on a weekly basis to reach USDA’s projection of 2.1 BB which seems to be a formidable task. The bottom line in corn is that even though the outlook looks bleak to the point of no return, it is overpopulated with bears causing sentiment to reach an extreme low.
Bean Outlook
The descent in soybeans has slowed, largely because of the difference between Conab’s estimate of 149.4 million tons for Brazil’s production, and the USDA at 157.0 million. Meanwhile, export inspections last week were 48.7 MB with China taking 29.9 MB. Although the overall pace of shipments is down 43 percent since the first week of November, they are up 21 percent from mid-January. Shipments to China have been rising since early January. The increase is probably temporary as Brazil’s harvest is in full swing with their stocks becoming available for export. In other developments, the short position of the funds has grown to 815 MB, the largest since 2019, while end users have increased their longs to 260 MB. Although the fundamentals for soybeans remain negative, the bear population is getting overcrowded.
Wheat Outlook:
There are few fresh developments in wheat with moisture in the Plains continuing to improve while tensions remain elevated in the Middle East, in addition to expectations for an increase in Russia’s production. Meanwhile, exports will likely continue to struggle as the USDA recently increased their export estimate for Argentina, Australia, and Ukraine. Last week, export inspections were the second highest of the season at 14.9 MB, but below the average of 18.4 MB that must be shipped weekly to meet USDA’s target of 725 MB. The bottom line in wheat is that it will continue to face a headwind from global competition.
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