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Corn Outlook:
Corn planting is winding down at 86 percent done putting the ball in Mother Nature’s court for the rest of the growing season. Currently, the long range weather forecasts do not point to any issues during June. NOAA’s forecasts show a weaker La Nino event from previous forecasts, which does not give the bulls a lot of ammunition. Looking at exports, inspections last week were 42.3 MB, but must average 45.7 MB to reach USDA’s projection of 1.725 BB. At the current pace, they could fall slightly short of their target. After two weeks of trimming their longs, the funds added 40 MB to their position last week increasing it to 115 MB. This leaves them ample room to add their longs in the event of a weather threat. Right now, corn faces the hurdle of the dollar having set an important low, which will tend to inhibit gains.
Bean Outlook:
Soybeans have risen to their highest level since last July on the back of fund buying. Currently, they are long 995 MB, which is just shy of the record set in 2012 at 1.125 BB. In the meantime, the short position of commercial traders has grown to a four year high of 1.365 BB. This creates a very fragile situation because when the funds and commercial accounts were at opposite extremes back then, soybean futures fell 23 percent in value. It pays to be wary of a price advance when this condition develops. Unless adverse weather intervenes, additional gains may be difficult to justify. In other developments, planting is 56 percent complete, which is on par with a year ago and compares to the average of 52 percent. While most areas are making good strides, Ohio, Kansas and Indiana are running 24 percent, 20 percent and 19 percent below their average. Last week was disappointing for exports with inspections a marketing year low of 2.8 MB. Like corn, the dollar setting an important low will create a headwind for soybeans.
Wheat Outlook:
Wheat does not have much of a story to tell. For the third consecutive week, the crop rating stood pat at 62 percent in good-to-excellent condition, and compares to 45 percent a year ago. In a few weeks, harvest will be in full swing and exert hedge pressure. Export inspections were a non-event at 11.0 MB. Search as much as you want, but it will be difficult for the bulls to muster an argument until after harvest.
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