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Corn futures continue to face some hurdles. Harvest is creeping along at 38 percent complete versus the average of 59 percent, but it has not raised much concern. Even with Minnesota and Iowa running 41 percent and 32 percent below their average, traders are not rushing to the plate. In fact, the funds have increased their short position to 1.015 BB, their largest stance since May. This puts them a bit overextended, which is supportive. Exports offer little help as inspections last week were 24.1 MB. We have to ship 37.1 MB each week to reach USDA’s target of 1.850 BB. While it seems like a miracle may be needed to bring the bulls back to the table, it must be remembered that change in sentiment frequently occurs when least expected.
For the moment, much of the positive news may be priced into soybeans. There has been a lot of discussion over the past several weeks regarding how La Nina will impact Brazil’s production. However, there are no assurances that it will develop. If it does not, the bulls will be sorely disappointed. In the meantime, recent showers have improved planting conditions. Currently, 20 percent of Brazil’s crop is planted compared to 29 percent a year ago and 20 percent for the average. Looking closer to home, producers are focusing on soybean harvest which is 70 percent complete, just below the average of 73 percent. Exports remain hot with inspections last week a marketing year high of 94.1 MB. China took 66.3 MB, or 70 percent of shipments which was a seasonal high for them. However, keep in mind that exports tend to cool off in November when China’s interest turns to South America. Looking at the funds, they bought 195 MB of soybeans last week putting them long 150 MB.
Finding positive news in wheat is much like searching for a needle in a haystack. World stocks are at a record level, plus exports are getting no trophies. However, prices reached a level this week where selling has subsided. Looking at exports, inspections were a marketing year low of 6.2 MB and must average 17.5 MB each week to reach USDA’s projection of 975 MB. Over the past 3 years, the U.S.’s share of global exports has fallen 9 percent, while that of the Black Sea region has risen 14 percent. Meanwhile, winter wheat planting is slightly behind schedule at 75 percent done versus 78 percent a year ago and 80 percent for the average. Looking at the funds, they increased their shorts 45 MB to 500 MB which may cause the boat to list to one side.
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