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Corn Outlook:
Since last month’s crop report, the question running across everyone’s mind is whether the corn crop is getting bigger, or smaller. With the crop ratings standing pat at 68 percent in good-to-excellent condition for the past six weeks, USDA’s yield estimate of 167.5 bpa may not change much. We will know tomorrow. In the meantime, harvest is lagging at 27 percent complete compared to 18 percent a week ago and 32 percent for the average. Exports are a sore spot with inspections last week a marketing year low at 18.4 MB. We have to ship 36.6 MB each week to reach USDA’s goal of 1.850 BB. In other developments, the trend following funds increased their short futures position last week to a token 15 MB. While the October Crop Report is generally a yawner, adjustments in harvested acres leaves the chance open for a surprise.
Bean Outlook:
Soybean harvest is progressing quickly at 42 percent complete compared to 21 percent a week ago and 32 percent for the average. Yields are coming in better than expected suggesting that the USDA may not vary much from last month’s yield estimate of 47.1 bpa. Export inspections were impressive last week setting a marketing year high of 41.2 MB. Keep in mind that China inked a deal with the U.S. a couple of weeks ago to purchase 13.1 million tons in 2015-16, which means that a pick up in sales is to be expected. In other developments, the trend following funds lightened their short position last week by 105 MB reducing it to 185 MB. The has been the factor underpinning the market recently.
Wheat Outlook:
Dry conditions in Russia and Australia the past few weeks has supported wheat. However, light showers are forecast in Australia over the next seven days, but it will remain dry in Russia a while longer. In the meantime, winter wheat planting in the U.S. is 49 percent complete compared to 31 percent the previous week and 51 percent a year ago. Export inspections have picked up recently with inspections last week at 20.4 MB. However, U.S. wheat remains overpriced in the world market with shipments down 18 percent from a year ago. Keep in mind that the technical pattern of the dollar shows that it is likely to increase 10-13 percent in value over the next few months, which will curtail exports. Over the past couple of weeks, the trend following funds have been covering some of their shorts and liquidated 50 MB last week reducing their position to 340 MB.
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