On The Money Grain Commentary 2-2-23

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Corn Outlook:

The bulls are playing the weather card in Argentina for all its worth. Recent showers have only slightly dampened their enthusiasm. Usually, when February rolls around, the discussion centers on planting intentions. However, it has barely been mentioned this year. Meanwhile, there is a huge hole in corn exports, and livestock numbers are down which, eventually, will come into focus. Last week, export inspections were only nominal at 20.7 MB, and must average 46.8 MB on a weekly basis to reach USDA’s target of 1.925 BB. Since the end of December, the pace of shipments has fallen 12.4 percent and are 29.6 percent below their five-year average. Long story short, when the passion with Argentina’s weather passes, it will be difficult to downplay the decline in demand.

Bean Outlook:

Soybeans have been underpinned several weeks from drought concerns in Argentina. Even though recent showers have developed, thoughts are that more rainfall is needed. Meanwhile, there has been an uptick in exports recently. Last week, inspections were slightly higher than the previous week at 68.1 MB with the pace of shipments rising for the third straight week. Shipments to China were also up for the third week at 51.7 MB. The recent increase in deliveries to China is probably only temporary until Brazil’s harvest gets into full swing. Currently, because of wet conditions, it is running behind at 5 percent complete compared to 10 percent a year ago. Nevertheless, a record crop is expected. Keep in mind that Brazil is China’s main source for soybeans, and that is not going to change.

Wheat Outlook:

Wheat has gotten a boost recently because of increased military aid to Ukraine, which will likely increase tensions with Russia. Also, cold temperatures in the southern Plains have lent support, and there has been a marginal uptick in exports. Inspections last week were 16.3 MB, and above the average of 15.2 MB that must be shipped each week to reach USDA’s projection of 77 MB. Currently, the pace of shipments is the highest since October. Keep in mind that Russia will offer stiff competition as their exports are forecast to be a record.

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