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Last week’s announced purchases of 230 MB of corn by China energized bullish sentiment and sent the market to an 8-year high. Because of the strength, traders will have great interest in next week’s supply-demand report as they look for a possible increase in China’s import estimate by the USDA. Meanwhile, the export pace has risen for 11 straight weeks with inspections last week at 43.4 MB. They must average 58.9 MB each week to reach USDA’s projection of 2.550 BB. Currently, they are on track for 2.100 BB. However, the target could be met if China remains aggressive. While the outlook for corn looks bright, the dollar is rising, and the funds are long a staggering 2.025 BB which could become a stumbling block.
Because of the slow harvest in Brazil, 2 percent complete versus 9 percent a year ago, it will be March before they have an exportable supply of soybeans as virtually no old crop stocks are left. As a result, there has been an uptick in the pace of U.S. shipments the past couple of weeks with inspections last week a healthy 65.8 MB. China took 36.2 MB, or 55 percent of shipments. The pace of shipments to them has risen the past 4 weeks because of low supplies in Brazil. However, the overall U.S. export pace is down 32 percent from the peak set in November. In the meantime, until March rolls around, soybean values will likely be supported until South American supplies become more available.
Until Russia’s export quotas go into effect, U.S. exports will continue to struggle. Last week, inspections were modest at 14.5 MB and must average 22.1 MB to reach USDA’s projection of 985 MB. The bottoming action in the dollar may also cause a headwind. That said, until the crop comes out of dormancy, the wheat market may be resigned to follow the lead of corn and soybeans.
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