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Corn Outlook:
Grain producers have been running 24/7 planting corn the past couple of weeks. Their effort paid off as 55 percent of the crop is in the ground compared to 19 percent the previous week and 38 percent for the average. Minnesota made the greatest progress running 49 percent above their average. Meanwhile, Kentucky, Ohio, and Tennessee still lag. Currently, the sentiment is bearish toward corn. The trend following funds are short 625 MB, which is a record heading into the growing season. In addition, the market is void of a weather premium with it being at its most oversold level since September. While yields of 165-170 bpa are commonly discussed, a long growing season is ahead. It is not getting much attention, but the U.S. Drought Monitor shows that areas of moderate drought in Minnesota and South Dakota have crept into severe drought. Long story short, the bears may be overconfident of the crop getting a free ride until harvest.
Bean Outlook:
While not as noticeable as corn, producers are making great strides in planting soybeans. As of last week, 13 percent of the crop was planted compared to 2 percent the previous week and 9 percent for the average. Over the past couple of weeks, prices have been underpinned from ideas that rapid planting progress in corn will equate to fewer acres of soybeans. I would not put much stock in this type of thinking, as the economics favor planting soybeans. In the upper Midwest, basis levels for new crop corn has put the flat price at 3.30-3.00, which is well below the cost of production. In other developments, export inspections were meager at 6.3 MB, but above the level to reach USDA’s projection of 1.790 BB. China was a no show. Last week, the funds liquidated 115 from their short position reducing it to 130 MB.
Wheat Outlook:
There is little news in wheat, which has kept the market in a trading range for over a week. Recent showers in the Plains bumped the ratings one point to 43 percent of the crop in good-to-excellent condition. Exports remain a sore spot with inspections last week at 11.9 MB, well below the average needed to reach USDA’s target of 880 MB. Yesterday, the market rebounded from the crop tour in Kansas showing damage from drought and disease. In other developments, the short position of the trend following funds has risen 40 MB to 520 MB. This is their largest position since December 2013.
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