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Selling in corn has subsided which has emboldened bottom pickers to search for bargains. However, the market faces a hurdle, namely exports. Last week, inspections were a meager 16.8 MB and must average 41.3 MB each week to reach USDA’s projection of 1.850 BB. In addition, signing of the Phase I trade agreement, which would give prices a psychological lift, remains in limbo. In other developments, harvest is just plodding along at 89 percent complete compared to the average of 98 percent. Furthermore, there are 4.5 million acres in the upper Midwest that are at risk of not being harvested until spring. If crop losses are 50 percent, production could fall 375 MB which would put ending stocks at 1.535 BB. Long story short, a showdown could be coming in the weeks ahead.
Soybean have been on a slippery slope since early November but started to turn up this week. Meanwhile, gains could be limited because of favorable weather in South America and the working of the Phase I trade deal with China that runs between hot and cold. Recently, President Trump said that fruition of a trade deal may not materialize until the 2020 election. However, Bloomberg News says that they are closer to reaching an agreement. Meanwhile, export inspections last week were 56.8 MB with China taking 40.0 MB. This is down from the 42.2 MB they took the previous week. With no crop issues in South America, China’s interest will soon turn to Brazil to meet their needs. Harvest in the Midwest is almost finished at 96 percent complete. However, Michigan, North Dakota, and Wisconsin lag and have about 820,000 acres yet to cut. Right now, soybeans are trodden down but could see a recovery because of oversold conditions.
Concerns of dryness in Australia and eastern Europe continue to underpin wheat. However, Egypt’s purchase of 295,000 tons from Russia this week is a reality check that the U.S. faces intense global competition. Last week, inspections were a marketing year low of 9.0 MB. Since late October, the pace of shipments has fallen nearly 15 percent. USDA’s projection is 950 MB and with the decline in shipments, it may be difficult to reach. Some beneficial moisture has recently fallen in the southern Plains, but southwest Kansas remains dry and bears watching.
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