On The Money Grain Commentary 11-3-16

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Corn Outlook:

For the moment, grain traders are mostly preoccupied with the FBI investigation into “Clinton Gate” and uncertainty surrounding the Presidential election. After next Tuesday, the focus will return to the fundamentals and weather in South America. Meanwhile, corn harvest is winding down at 75 percent complete, which is on par with the average. Exports started the season strong, but the pace has fallen 39 percent since mid-September. Inspections last week were 31.1 MB, and below the average needed to reach USDA’s projection of 2.225 BB. At the current pace, shipments are on track for 1.8 BB. Looking at the funds, they reduced their short position 30 MB last week to 315 MB. For the past few weeks, fund short covering has been corn’s supportive influence.

Bean Outlook:

Soybeans seems to be losing their luster. Exports have been trekking in the fast lane the past few weeks with inspections last week at 105.3 MB. China took 84.3 MB or 80 percent of total shipments. However, the torrid pace is unlikely to continue as exports tend to peak in November after Brazil’s crop is planted. When shipments peak, they fall, on average, 83 percent into the end of the marketing year. Historically, the range of the decline is between 63-96 percent. Harvest is 87 percent complete and will be wrapped up in another week. For the fourth consecutive week, the funds have added to their longs. Last week, they increased their long position 85 MB to 405 MB. Right now, South America is expected to produce a record crop. Planting in Brazil is 41 percent done compared to the average of 40 percent. If no serious weather threat arises, and exports peak in accordance with the norm, look for the funds to lighten their longs.

Wheat Outlook:

Wheat has become a wallflower taking its lead from corn and soybeans. Exports have dropped off since the end of September falling 48 percent. Inspections last week were 11.9 MB and below the average needed to reach USDA’s projection of 975 MB. At the current pace, they are on track for 825 MB. Winter wheat planting is 86 percent complete with 58 percent of the crop rated in good-to-excellent condition, down one point from the previous week. This compares to a rating of 49 percent a year ago. Last week, the funds added 125 MB to their short position increasing it to 700 MB. As it stands now, some event will probably be needed to spook them into covering.

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