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December is typically a quiet month because of the holidays. Corn in the bin usually stays put unless there is a surge in values prying it loose. As I mentioned last week, fund managers may not want to take excessive risks if they are showing good profits. As we get closer to year end, trading could become erratic as positions are closed. The last thing fund managers want is a decline in open trade equity. Export inspections last week were a snoozer at 31.5 MB, and below the average needed to reach USDA’s projection of 2.225 BB. At the current pace, we have a lot of ground to cover to achieve their target. Looking at the funds, they liquidated 135 MB from their short position last week reducing it to 290 MB. For now, a catalyst enticing them into going long is lacking unless exports pick up, or concerns mount regarding planting intentions next spring.
Soybeans started on solid footing this week because of palm oil reaching its highest mark since September 2012, as well as speculation for more sales to China. However, prices have since backed off. While exports have been blistering hot over the past several weeks, they are showing signs of cooling off. Inspections last week were 76.8 MB, but the pace of shipments has declined for the second straight week, and are down 7 percent from their peak. As mentioned in previous comments, exports tend to peak in November and typically fall 83 percent until the end of the marketing year. Meanwhile, shipments to China were reported at 61.6 MB, and are down 28 percent from their peak. This is a heads up for the bulls. Looking at the funds, they added 115 MB to their longs last week increasing them to 545 MB. This will be a difficult position to maintain if exports have peaked, or adverse weather fails to develop in South America.
Wheat is starving for fresh news and little is available. Last week, the crop rating stood unchanged at 58 percent in good-to-excellent condition, and compares to 55 percent a year ago. Exports have little to offer with inspections last week a meager 8.1 MB. Meanwhile, the pace of shipments have been slipping since late September. On the bright side the funds have lightened their short position 95 MB reducing it to 675 MB. However, they will likely stick with the rest of their position unless some catalyst nudges them out of their comfort zone.
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