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Grain traders have been on pins and needles as investors, fearful of missing out on the parabolic rally in stocks, were broad sided as a result of their euphoria. An historic jaw dropping sell-off of 1175 points in one day in the Dow is enough to catch everyone’s attention, even the dead! While a close eye is being kept on the macroeconomic environment, it is mostly business as usual in corn. Last week, the funds became uncomfortable with their short position and trimmed it 510 MB to 730 MB. Exports were a bright spot with inspections a marketing year high of 42.2 MB. Meanwhile, the USDA projects 2017-18 ending stocks of corn falling 125 MB to 2.352 BB with global stocks dropping 3.5 million tons to 203.1 million. Argentina’s corn crop is forecast to be down 3.0 million tons to 203.1 million, while Brazil is unchanged at 95.0 million. This is a step in the right direction.
While traders are keeping close tabs with the uproar in the financial markets, they have not forgotten about South America. Weather in Argentina has been problematic for soybeans, but showers are in the forecast late this week. Last week, the funds were active as they whacked 310 MB from their short position reducing it to 275 MB. Exports were better than expected with inspections at 47.9 MB. Looking at the USDA, they hiked 2017 ending stocks 60 MB to 530 MB, but lowered world stocks 500,000 tons to 98.1 million. The rise in ending stocks came from a corresponding drop in exports. Argentina’s crop fell 2.0 million tons to 54.0 million, but it was offset by a 2.0 million ton increase in Brazil’s crop to 112.0 million.
Weather in the southern Plains and exports continue to be the dominant factor in wheat. Dryness is an issue in the region and will become a bigger factor when the crop emerges from dormancy. Meanwhile, exports continue to struggle because of competition from the Black Sea region. Last week, the funds were aggressive as they covered 245 MB of their short position reducing it to 585 MB. USDA raised 2017-18 ending stocks a modest 9 MB to 1.009 BB, but lowered world stocks 1.9 million tons to 266.1 million. This came from an increase in usage.
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