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Last week, the funds covered 70 MB of their short corn position reducing it to 1.250 BB. However, this is just a dent in in the bucket considering the size of their position. With the crop in the bin, the market needs a catalyst to trigger additional liquidation. That may be difficult to find as weather is beneficial to planted crops in South America, while exports are stone cold. Last week, inspections were only 25.1 MB, and must average 40.9 MB each week to reach USDA’s target of 1.925 MB. Currently, inspections are running 42 percent behind a year ago. Looking ahead, the upside in corn looks limited unless weather in South America takes a turn for the worse causing the funds to cover additional shorts, or there is a surge in exports.
Weather has improved in South America recently, but soybeans will remain sensitive to NOAA Weather Service increasing the chance for a La Nina threat later this winter. Right now, the funds are short a modest 70 MB, but it would not take much for them to do an about face in the event conditions deteriorate. Looking at exports, inspections last week were healthy at 58.0 MB, but the pace of shipments has fallen 14 percent since peaking a couple of weeks ago. As mentioned in previous comments, shipments tend to peak in November and decline 85 percent through the end of the marketing season. China took 43 percent of last week’s shipments, but that is down 43 percent from a few weeks ago. Meanwhile, looking in the weeks ahead, weather in South America will be the predominant interest to traders for the next couple of months.
Wheat is about as popular as a “Blue Moon” toilet to the female gender! It has been on traders’ blacklist even though winter wheat conditions have been deteriorating. This is largely because global stocks are at a record level, while exports remain sluggish. Last week, inspections were 12.6 MB and must average 19.5 MB each week to reach USDA’s projection of 1.0 BB. They have suffered as the Black Sea region is the cheapest source of wheat on the planet. Looking at the funds, they were inactive last week as their short position stood unchanged at 660 MB.
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