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Corn Outlook:
The past couple of weeks has been horrific for corn futures as they have fallen nearly 17 percent in value. Benign weather and the steep sell-off in China’s stock market have been factors contributing to the decline in grains. In the meantime, the trend following funds boxed themselves into a tight spot last week when they added 345 MB to their long position increasing it to 1.040 BB. This is their largest long in corn since November 2013. Positions established since late June are now underwater which could exaggerate the price move lower. In other developments, the crop rating for corn rose one point last week to 70 percent in good-to-excellent condition. According to Ag Watch’s yield model, this translates to a national yield of 164.6 bpa compared to USDA’s estimate of 166.8 bpa. Export inspections were routine at 43.6 MB, and below the average of 53.5 MB needed to ship each week to reach USDA’s projection of 1.850 BB.
Bean Outlook:
Weather is vital in August for soybeans, but it appears that we will dodge any serious issues, as inflammatory conditions are not in the forecast over the next few weeks. The market has been on the defensive the past couple of weeks as crop conditions are stable. Last week, sixty-two percent of the crop was rated in the good-to-excellent category, unchanged for the past three weeks. According to Ag Watch’s yield model, the national yield is 45.5 bpa versus USDA’s current estimate of 46.0 bpa. With weather mostly benign, fresh news will be scarce for soybeans until the crop report next month. At that time, we could see some fireworks, especially with the acreage resurvey, and the first look at a field inspection for the yield estimate. Although soybean futures have been on the defensive the past several days, the long position of the trend following funds remained unchanged last week at 400 MB. Export inspections were less than expected at 4.4 MB, and below the average needed to reach USDA’s projection of 1.825 BB.
Wheat Outlook:
Wheat futures have been under relentless selling pressure for most of July. The EU has lowered their production prospect, but it may only offer a dead count bounce. Harvest is winding down at 85 percent done compared to 75 percent a week ago and 80 percent for the average. Progress in Michigan and Ohio is trailing the average by 34 percent and 17 percent. The rating for spring wheat improved one point to 71 percent of the crop in good-to-excellent condition, and compares to 70 percent a year ago. Export inspections were 16.1 MB, and below the average of 19.2 MB needed each week to reach USDA’s target of 950 MB. So far, this season, we have not met the average. Last week, the trend following funds added 30 MB to their short position increasing it to 90 MB.
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