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I have not had an opportunity to look at the latest weather updates for Brazil this morning, but Dr. Cordonnier did cut production estimates again in his weekly update. He is now calling for a bean crop of 116 MMT, down another 3 million and maintains a lower bias moving forward. He notes that around 60% of the crop is now in the pod filling stage and conditions/forecasts have improved little. He also lowered his corn estimate, trimming it by 1 MMT to 93 MMT. Thus far he has left the Argentine production estimates unchanged with corn projected to come through at 40.5 MMT and beans 56 MMT.
While none of us know at this point when the USDA will be fully operational again and a new date set for the final crop production report but regardless, there are trade surveys filtering in. According to number collected by Reuters, the trade expects corn production to come in at 14.538 billion bushels from a yield of 178. This would be a reduction of 88 million bushels from the last report. The total bean production estimate is 4.572 billion from a yield of 51.8. This would be 28 million bushels lower than previous. Ending stock projections fall in at 1.694 billion in corn- down 87 million, 904 million in beans-down 51 million and 987 million for wheat-up 13 million.
Equity markets continue to bask in the warm glow of several positive economic reports late last week and we have seen the S&P 500 extend higher again this week. While I do not believe this signals that we have a major new advance in the offing, weekly indicators are oversold and trying to turn higher, which could suggest that at least for the first quarter of this year, equities will have rebound potential, which in turn could starve commodities for a bit longer. Take note though that the US Dollar has not enjoyed a similar bounce and appears to be teetering on the edge of a further breakdown.
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