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Bargain hunters are beginning to return to the corn market as global demand is up 4.1 percent from a year ago while stocks are down 19.5 percent. Although stocks are considered adequate, a production mishap either in South America or the Midwest this winter or next spring can be ill afforded. Meanwhile, exports are on the upswing running 74 percent ahead of last year. However, inspections this the week were disappointing at 39.2 MB, the second lowest of the season. Even though recent showers have hampered harvest in much of the Midwest, it is moving along at 39 percent complete compared to 27 percent a year ago and 35 percent for the average. Looking at the funds, they covered shorts for the third consecutive week reducing their position 75 MB to 405 MB.
The fundamentals for soybeans remain bearish amid record global stocks. They got a boost early this week from a record September crush of 160.7 MB that prompted the funds to cover short positions. Last week, they were short 505 MB. In other developments, export inspections last week were a marketing year high at 42.5 MB, and above the average needed to reach USDA’s projection of 2.060 BB. However, the cumulative pace of shipments continues to lag a year ago by 35 percent. One bright spot was that China took 4.9 MB. While this is not a big shipment, it was the largest reported to them since June. Meanwhile, Argentina took 2.3 MB which could be destined for China. Because of wet weather in much of the Midwest, harvest progressed at a snail’s pace of 38 percent complete. This compares to 47 percent a year ago and 53 percent for the average. However, the slower than expected pace has not caused much concern as the forecast shows clear conditions for the next 10 days.
Although wheat production in Australia and Black Sea Region is down 3.5 million tons from last month, it has not translated to an increase in U.S. exports. They continue to struggle with inspections last week a modest 16.5 MB. Shipments are running 27 percent behind a year ago and must average 22.3 MB each week to reach USDA’s projection of 1.025 BB. However, they should improve once exports from Russia begin to slow. In other developments, winter wheat planting is 65 percent complete compared to 58 percent a year ago but lags the average of 67 percent. Looking at the funds, they increased their shorts last week a token 10 MB to 220 MB.
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