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There is not a great deal of fresh news in corn other than great strides were made in harvesting last week which is 63 percent done, on par with the average. Weather in South America is favorable with expectations that Brazil could produce a record crop. While corn exports have been the shining star in the grains, some cracks are showing. Last week, inspections were a marketing year low of 25.7 MB. During the past 3 weeks, the pace of shipments has fallen 20.9 percent. While this may be only an aberration, it could be the result of exports being front end loaded because of the trade spat with China. The next couple of weeks will tell. Looking at the funds, they have been mostly inactive and hold a short position of 145 MB.
Optimism has grown from a tweet by President Trump on Thursday that trade talks with China are progressing. President Trump and China’s leader Xi Jinping are scheduled to talk at the G-20 meeting late this month. The new agreements reached with Mexico and Canada in recent weeks may act an incentive for China to renew negotiations. Looking at exports, they have shown recent improvement with last week’s inspections a marketing year high of 47.9 MB. This was the second consecutive week that they have been above the average needed to reach USDA’s projection of 2.060 BB. China took a token 2.5 MB in shipments while Argentina received 6.4 MB. Harvest is in the homestretch at 72 percent done. As it winds down, the focus will turn to South America with expectations that Brazil will produce another record crop. If they do, it will be their third consecutive one. Looking at the funds, they have turned more aggressive as they increased their shorts 45 MB to 515 MB.
The drought in wheat exports showed a small glimmer of hope late last week as Egypt tendered for 62,000 tons from the U.S. However, this is only a drop in the bucket as to what is needed as inspections last week were just run of the mill at 14.4 MB. We must average 22.8 MB each week to reach USDA’s target of 1.025 BB. This is a tall order, and the chances are their projection will likely be lowered in the November report. Meanwhile, winter wheat planting is 78 percent complete and trails the average of 85 percent. The first crop rating of the season shows 53 percent in good-to-excellent condition, one point above a year ago. Looking at the funds, they have increased their short position 60 MB to 275 MB.
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