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Traders are searching for a story in corn and need one with clout. Weather in Argentina continues to be a talking point, while the U.S. Drought Monitor showing expanding dry conditions in the western Corn Belt, is starting to grab attention. However, it will not become a factor until we get closer to planting. Right now, the greatest issue supporting corn is the decline in the dollar, and the funds short a hefty 1.290 BB. The market seems to have reached a point of value that could cause them to cover their shorts. Looking at exports, inspections last week were 26.3 MB, which is short of the average of 44.5 MB needed to be shipped each week. Year-to-date shipments are trailing last year by 36 percent.
Soybeans have been rising on concerns that problematic weather in central and southern Argentina will lower production. While that is a given, world supply is at a record high, and any shortfall will probably be made up by Brazil. This suggests that unless conditions worsen, the recovery could get derailed. Right now, the greatest supportive factor for soybeans is the funds are short 685 MB, just shy of the record of 735 MB. Looking at exports, inspections last week were 52.1 MB, the best seen in five weeks. As a result, shipments saw their first uptick since November. However, one week does not constitute a change in trend.
Wheat is supported by the fewest planted acres in the U.S. in 100 years, dry conditions in the Plains, and a weakening dollar. However, record world stocks overhang, and exports are lackluster because of competition from the Black Sea region. Last week, export inspections were nimble at 12.4 MB and below the average of 20.3 MB that need to be shipped each week to reach USDA’s projection of 975 MB. Looking at the funds, they increased their shorts 85 MB last week to 820 MB. Right now, the market needs a catalyst to cause them to cover.
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