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Corn Outlook:
A potential clash of the titans may cause a shift in the tide of corn. Currently, the funds are short a near record 1.585 BB. However, because of low values, producers are not selling, and commercial users are finding it difficult to acquire inventory. As a result, the commercials have accumulated a long position of 560 MB, their largest since December 2005. If they continue to add to their position, it may force the funds to cover. In other matters, the crop rating fell one-point last week to 67 percent in good-to-excellent condition but is above the year ago rating of 57 percent and is par with the 10-year average. Looking at exports, inspections last week slipped to 38.2 MB and were well below the average of 71.7 MB that must be shipped weekly to meet USDA’s target of 2.225 BB. The bottom line in corn is that the funds are extremely short, and if they cover, a price recovery could develop. However, the fundamentals remain negative longer-term.
Bean Outlook
Soybeans are facing a similar situation as corn in there is a wide disparity between the position of the funds and commercial users. Currently, the funds are short a near record 920 MB; whereas, commercial users are long a record 550 MB. If necessary, the commercials will take delivery if they cannot acquire the cash product. This situation could prompt the funds to cover. Meanwhile, in other matters, the crop rating last week stood unchanged at 68 percent in good-to-excellent condition compared to 54 percent a year ago and 63 percent for the 10-year average. Export inspections improved at 12.0 MB but were below the average of 23.9 MB that must be shipped weekly to reach USDA’s projection of 1.7 BB. China took 137,000 bu. and have not taken a shipment exceeding 1 MB since the first week of June. However, the Peoples Bank of China has lowered its interest rate, which may improve demand. Meanwhile, the bottom line in soybeans is even if the funds cover their shorts, the longer-term outlook remains negative.
Wheat Outlook:
There is not much news in wheat other than the winter harvest is progressing quickly at 76 percent complete compared to 65 percent a year ago and 72 percent for the average. Showers are forecast in the Black Sea Region, but overall conditions remain dry. Following a marketing year high in export inspections a couple of weeks ago, they were at a marketing year low last week of 8.7 MB. We need to ship 16.2 MB on a weekly basis to achieve USDA’s target of 825 MB with the current pace on track for shipments of 680 MB.
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