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A new year has rolled in raising the question, what is in store for the grains in 2018? The final crop report for 2017 will partially provide an answer, while weather in South America will be deliberated for the next several weeks. Afterward, the focus will turn to spring planting intentions and weather in the Midwest. These factors are issues that traders muse over each year. However, I believe that the political landscape, both at home and abroad, could be equally important as well. Export inspections were up slightly last week at 26.9 MB, but below the average of 43.1 MB needed to be shipped each week to reach USDA’s target of 1.925 BB. Looking at the funds, they reduced their shorts for the second straight week to 1.195 MB and may be getting into a short covering mode.
A hot, dry forecast in southern Argentina the next 7-10 days is catching traders’ interest, as it is too early in the season to assume that South America’s soybean crop will go unscathed before harvest. Meanwhile, exports continue to slide with inspections slipping to 41.8 MB. They have slid for seven straight weeks with shipments falling 44 percent since November. As mentioned in previous comments, when shipments peak, they generally slide 85 percent before the marketing year ends. Looking at the funds, they became more aggressive last week increasing their short position 125 MB to 410 MB. Be aware that they have flip-flopped their position on several occasions since October.
Artic type weather in the southern Plains and Midwest during the holidays supported wheat this week as frigid temperatures are raising concerns of winterkill. However, the extent of damage will not be known for several weeks. Meanwhile, export inspections were disappointing at 10.0 MB, the third lowest shipment of the season. Looking at the funds, they trimmed their shorts 40 MB to 795 MB. This was the second week of liquidation with more possible, especially with the market rising to its highest level since early December.
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