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Corn continues to drift in a three-month trading range like a boat without a paddle. During this period, the funds have amassed a short position of 1.070 BB. This is their largest short position during October since 2013. What the market needs now is one big laxative to flush out the weak longs! Unless that happens, the funds have little reason to cover shorts, plus commercial users do not have much incentive to extend longer range coverage. The lack of commercial interest can be seen from exports running 46 percent below last year. Last week, inspections were 20.3 MB and must average 37.5 MB each week to reach USDA’s projection of 1.850 BB. Looking at harvest, it is going to be drawn out as only 54 percent of the crop is in the bin versus 72 percent for the average. However, with ending stocks projected at 2.340 BB, traders are not too concerned.
Soybean harvest is winding down at 83 percent done meaning traders will look to South America’s crop in the months ahead. Currently, Brazil’s crop is 31 percent planted, which is slightly less than the average of 34 percent. An improving weather pattern is expected to develop that should put concerns of La Nina at ease for the moment. Looking at exports, they continue to shine with inspections last week the second highest of the season at 92.0 MB. China took 76.7 MB which was a marketing high for them. However, exports will likely cool off later this month once Brazil’s planting is complete and China’s interest switches to South America. Last week, the funds were active and shed 140 MB of their long position reducing it to a token 10 MB.
Wheat has been kept in the dark depths of the abyss because of abundant global stocks and lagging exports. Inspections last week were 11.5 MB and must average 17.7 MB each week to reach USDA’s projection of 975 MB. Currently, shipments are running 5 percent below a year ago. Looking at the funds, they show little sign of letting up as they are sporting a short position of 505 MB. In other developments, winter wheat planting is wrapping up at 84 percent done with the first crop rating of the season showing 52 percent of the crop in good-to-excellent condition. This compares to 58 percent a year ago and 54 percent for the average.
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