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The market is getting prepared for next week’s USDA reports. The two main private estimates are out of the way and harvest is winding down. For both corn and soybeans, the pre-report estimates are not that much different than USDA’s October numbers.
There do seem to be some differences regarding crop sizes in some of the northern states, especially Minnesota. Although the initial reaction to the mid-September frost/freeze was “no big deal,” now some may be wondering if crops were hurt more than first thought.
Meanwhile, there is a shift in focus to demand. Exports for corn and soybeans have not been that outstanding in the past few weeks. Actually, soybean exports have been down right ugly (380 million bushels less than last year’s sales at this time!). It is a concern that China has not been buying US beans recently. They have been active in South American markets instead. The USDA will need to reduce bean exports, but it is hard to imagine that they will be very aggressive. More likely, they will reduce numbers a little bit over several months.
For corn, the demand news is more mixed. Weekly ethanol production numbers have been large following a seasonal plant maintenance period in September. Exports are a little slow, but they need to be less than year-ago levels due to the small crop. There are other countries, such as Argentina and South Africa, selling corn and there is still plenty of feed wheat in the world.
The wild card in the US is corn feed use. The market will not have data on this until January 12th. That is a long time to wait, but that is when the December 1st stocks reports will be released. The USDA imagines corn usage is being reduced—is this happening?
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