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USDA rattled the cage of the “spooks and goblins” in the October Crop Report, but not as much as they did in August and September. They increased the corn yield 1.9 bpa to 171.8 bpa, but harvested acres were lowered 400,000. This led to a nominal increase in 2017-18 ending stocks to 2.340 BB. Meanwhile, global stocks fell 1.5 million tons to 201.0 million. The decline in global stocks is a step in the right direction for the bulls. Exports offer little in the way of bragging rights as inspections last week were a marketing year low of 20.6 MB. Shipments need to pick up as the pace has fallen 8 percent since the marketing year began. Looking at the funds, they have increased their shorts 55 MB to 855 MB. This is their largest position since June.
“Trick or treat” candy was handed out to the bulls when the USDA lowered their yield estimate in soybeans 0.4 bpa to 49.5 bpa, and 2017-18 ending stocks 45 MB to 430 MB in the crop report. In addition, world stocks fell 1.4 million tons to 96.1 million. However, this is still the third highest stocks level on record. Exports are smoking as inspections last week were a marketing year high of 54.5 MB. China took 35.8 MB, their largest shipment since the marketing year began. Meanwhile, look for exports to them to cool off in November unless Brazil’s crop is threatened. Looking at the funds, they continue to abandon their shorts as they have reduced them to 90 MB. This was their fifth week of liquidation.
USDA bumped their 2017-18 ending stocks estimate for wheat 27 MB higher to 960 MB. Their projection for world stocks rose 5.0 million tons to 268.1 million, which is a new record. This is a tough report to get the bulls excited. Looking at exports, inspections were disappointing last week at 12.8 MB, the second lowest shipment of the season. Long story short, the Black Sea region is eating the U.S.’s lunch! One bright spot in wheat is that the funds have liquidated their short position for four consecutive weeks. Last week, they reduced their position 40 MB to 430 MB.
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