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Corn was underpinned this week from ongoing weather concerns in Argentina and expectations that there could be an uptick in inflation. The Federal Reserve is putting everyone on notice that they may raise interest rates a couple of times in 2018 which is giving rise to ideas that inflation might be on the upswing. This likely triggered the funds to bail out of shorts last week. In corn, they dumped 370 MB of their shorts reducing them to 360 MB. Right now, the question is whether they will cover the rest of their position and go long. If they do, additional gains in corn are likely. After setting a marketing year high last week, export inspections slacked off this week at 32.8 MB. We need to ship 49.3 MB each week to reach USDA’s projection of 2.050 BB.
Ongoing concerns of dry weather in Argentina have been an on again, off again, affair for several weeks in soybeans. However, any shortfall in production could be made up with Brazil’s crop. Meanwhile, another factor underpinning values is expectations for an uptick in inflation and the rebound in stocks following last week’s washout. The funds apparently think the market has found an area of value as they cut 45 MB from their shorts last week reducing them to 290 MB. Like corn, the question is whether they will cover the rest of their position and go long. Looking at exports, inspections last week were 48.4 MB. This was the second straight week the pace of shipments has improved.
Dry conditions in the southern Plains continues to underpin wheat. This could become a big factor next month when the crop emerges from dormancy. Last week, the funds bailed on 115 MB on their shorts reducing them to 470 MB. Additional short covering will could bring some bulls back to the table. Looking at exports, they remain a sore spot with inspections last week at 17.9 MB. This is barely above the average needed to reach USDA’s target of 950 MB.
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