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Corn is caught in a tug of war between a record crop and strong demand. With USDA’s yield estimate of 173.4 bpa, production at 15.0 BB, and ending stocks of 2.320 BB, exceptional demand is a must for support. So far, exports have been brisk, but a note of caution is warranted as inspections last week were a marketing year low of 44.5 MB. This is the first time that they have fallen below 50.0 MB this season. Right now, the focus is on supply leaving demand on the J.V. team until harvest is complete and the crop is in the bin. Currently, harvest is 35 percent done compared to the average of 38 percent. Meanwhile, the funds covered 130 MB of their shorts last week reducing them to 825 MB. Bullish input will be needed for them to cover additional shorts.
Soybeans seem to be made of Teflon, as they have been confined in a broad range since August as prices search for a direction. Supply is a big concern, especially with a record yield estimate of 51.4 bpa, production at 4.269 BB, and ending stocks of 395 MB. Exports have been so-so since the marketing year began, but picked up last week with inspections posting a marketing year high of 66.1 MB. This caused an uptick in the pace of shipments. Once harvest is complete, currently it is 44 percent done, attention will turn to demand and the South American crop. As of last week, soybean planting in Brazil was 11 percent complete compared to the average of 10 percent. Meanwhile, another record crop is expected. Looking at the funds, they increased their longs 55 MB last week to 195 MB. With a record yield for U.S. soybeans in the making, and a potential record crop on tap in Brazil, the funds may meet a headwind in supporting their position.
Wheat continues to be tugged between oversupply amid improving demand. Currently, the USDA projects ending stocks at 1.138 BB. In the meantime, exports are running 28 percent above a year ago with inspections last week at 15.9 MB. However, greater improvement is needed to put a dent in supply. Winter wheat planting is progressing at 59 percent complete, one point below the average. Last week, the funds added 105 MB to their short position increasing it to a record 825 MB. Meanwhile, commercial traders are long 180 MB. This is the widest discrepancy seen in some time, and creates a situation that the bears should heed.
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