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Grain exports continue to be large
Exports seem to be the topic of the day. Of course, this morning was the weekly export sales report, so this is logical. On Thursdays, the exports provoke more thinking and conversation about this category of demand and prices, since exports can influence prices so much.
The highlight of the report was corn exports, which were very large again this week at 1.7 million tons. Traditional customer Japan was the largest buyer. Last year the Japanese and many other Southeast Asia countries scoured the world for cheaper feedgrains. This year, they are back buying traditional U.S. corn.
Corn exports continue to grow in spite of cutbacks by China. Today’s report, like past reports, showed corn originally destined for China being rerouted to other destinations. This morning, there was also the announcement of straight cancellations of corn purchases by China. While the daily reports of unauthorized GMOs have ceased, the problem has not gone away.
Bean and meal exports continue to be large as well. OK, perhaps bean exports aren’t huge, but it is getting to the point where any new export sale is too much. China continues to buy and ship beans, as well as many other customers. New-crop beans have just started flowing out of Brazil, but it is too early for sizable quantities.
For both commodities, therefore, analysts have dialed up the amount of exports for this crop year. Especially for soybeans, this tightens the balance sheet enough to cause people to wonder what the final carryout will be, how many beans the U.S. needs to import, the trade-offs that could be made between crush and exports, etc. For corn, it is more of a price discussion, as a tighter carryout/total demand ratio suggests steady to higher prices to many analysts.
The USDA will have the opportunity to raise exports and tweak the supply/demand tables on Monday, February 10. Market participants will also look for adjustments to South American crop sizes. With the concern about dry weather in Argentina a while ago and the current dry weather in Brazil, the most common question is how much the corn crops will be reduced.
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