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Corn Outlook:
Corn would be facing a greater headwind if it were not for strength in soybeans. For three weeks, the funds have been lightening their short position. Last week alone, they covered 325 MB reducing their shorts to 345 MB. However, the market had only a lukewarm reaction. This is largely because of heavy selling by commercial interests as we are in the midst of harvest. Currently, it is 61 percent done versus the average of 62 percent. Exports have been a bright spot for corn as they are running 75 percent above a year ago. However, that may be changing as inspections last week were a marketing year low of 21.3 MB. In addition, the pace of shipments has declined 27 percent since mid-September. With a record crop on tap, it is imperative that demand remains strong to chew through the glut in supply.
Bean Outlook:
Soybeans are floating all boats in the grains. They are underpinned from concerns of reduced palm oil production in Malaysia, strong exports, and fund buying. Last week, the funds bought 70 MB increasing their long position to 320 MB. This was their third consecutive week for adding to longs. In the meantime, export inspections last week were red hot at 100.6 MB with China taking 79.5 MB or 79 percent of shipments! However, be aware that exports tend to peak in November after Brazil’s soybean crop is planted. It is almost like clockwork. When shipments peak, they fall, on average, 83 percent by the time the marketing year ends. If we follow the norm, weekly shipments could dwindle to less than 13.0 MB at the end of next August. Meanwhile, harvest is 76 percent done, which is spot on with the average.
Wheat Outlook:
Wheat has hit a snag as the pace of exports has declined for the past three weeks. Inspections last week were a marketing year low of 8.9 MB. Since late September, the pace of shipments has fallen 36 percent. Demand must stay firm to put a dent in a global supply that stands at a 30-year high. Three weeks ago, the funds were sporting a record short position of 825 MB, but that has since been trimmed to 575 MB. Without additional short covering, it will be difficult for the market to gain much traction. In the meantime, winter wheat planting is 79 percent complete compared to the average of 82 percent. The first crop rating of the season shows 59 percent of the crop in good-to-excellent condition versus 47 percent a year ago.
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