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China remains the topic of discussion in ag circles, but the acreage debate is beginning to gain prominence. The Ag Outlook Forum will lend insight as to what producers will plant this spring, but many will stay on the fence in their decision until the guaranteed crop insurance price is set at the end of the month. Meanwhile, traders are optimistic that China will continue to purchase large quantities of corn to feed their hog population. I show that they could buy an additional 150 MB. Last week, export inspections were 52.0 MB with the pace of shipments having risen for 13 consecutive weeks. We must ship 60.8 MB each week to reach USDA’s projection of 2.6 BB. Currently, shipments are on track for 2.380 BB. While the fundamentals in corn are positive, the biggest risk is that everyone is bullish.
Ending stocks of soybeans at their lowest since 2013 is the major factor supporting the market. However, there are some yellow flags, namely declining exports. Last week, export inspections were a marketing year low of 29.7 MB. The pace of shipments rose for three straight weeks but declined this past week. China took 14.8 MB which was a marketing year low for them as well. Since the first week of November, shipments to them have fallen 47.7 percent. Even though harvest in Brazil has been slow because of wet conditions delaying their exports, it is apparent that China’s interest in U.S. soybeans has peaked.
Recent frigid temperatures in the Midwest and Plains have raised concerns of winterkill and is offering support to wheat. However, record global stocks, in addition to Russia’s production the highest since 2017, and Australia the highest since 2016, will limit gains. Meanwhile, exports are not winning any awards. Inspections last week were 14.4 MB and must average 23.0 MB each week to reach USDA’s target of 985 MB. While shipments have risen for 4 consecutive weeks, they are on track for 913 MB.
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