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Now that the calendar has turned to March, the competition for acres between corn and soybeans will heat up. The price relationship between the two at the end of February, when the crop insurance rates were set, gives soybeans the edge. However, if there is an early start in planting, corn may pick up a few of those acres. Looking at exports, inspections sizzled last week at a marketing year high of 64.4 MB. This is the second week in a row a marketing year high has been posted. The largest shipments were to China followed by Japan and South Korea. There are some concerns that the recent outbreak of African Swine Flu might curtail China’s imports, but that has not bothered the bulls, so far. While export sales are running well ahead of their five-year average, we must ship 61.1 MB each week to reach USDA’s target of 2.6 MB. This could be a tall order.
There have been no announced sales of soybeans recently which may make the bulls a little skittish. While Brazil’s harvest is running below the average pace of 25 percent versus 40 percent a year ago reducing supplies for export, China has waited patiently for their crop. Last week, export inspections were above the previous week at 32.3 MB, but the overall pace of shipments has fallen 55 percent since November. In previous years, the pace has fallen as much as 85 percent. China took 11.7 MB, or 36 percent of shipments. However, the pace of shipments to them has declined 74 percent since late November. Right now, the factor supporting soybeans is that ending stocks are tight and the growing season lies ahead.
Wheat has found some support recently from declining conditions of the winter crop in Kansas, Oklahoma, and Texas. However, there may be an improvement next week as a rain system is forecast to move through the area. In the meantime, exports are mediocre with inspections last week only 10.0 MB. We must ship 23.0 MB on a weekly basis to reach USDA’s projection of 985 MB. Meanwhile, the U.S. may benefit if Russia moves to impose an export quota.
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