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The grains are facing a lot of uncertainty in the weeks ahead arising from Argentina’s subpar crop, planting intentions, Midwest weather during the growing season, and possible retaliation from the tariffs placed on steel and aluminum imports. Meanwhile, planting is getting underway in the Southeast with the word being fewer acres of corn going into the ground and more soybeans. This may be foretelling of intentions in the Corn Belt as well. Looking at exports, inspections last week were a marketing year high of 54.2 MB. We must ship 56.9 MB each week to achieve USDA’s projection of 2.225 BB, which will be a tall order. The funds were active last week as they boosted their long position to 1.0 BB prior to the USDA report, but unloaded a large portion of it afterward.
Soybean traders are facing an array of factors influencing prices such as, ending stocks the second highest on record, potential record acres planted this spring, a crop in Argentina that continues to shrink, plus a possible trade retaliation from China. USDA currently projects Argentina’s crop at 47.0 million tons, down 7.0 million from February. This is their smallest crop since 2011. Meanwhile, some private estimates look for it to fall to 44-42 million tons. Brazil’s crop, on the other hand, is expected to be up 1.0 million tons to 113.0 million, although one private source projects it as high at 117.3 million. All these issues will keep traders on edge in the weeks ahead. In other developments, soybean inspections last week were 33.3 MB. Since November, shipments have fallen 62 percent with the pace likely sliding to 85 percent if we follow the norm. Looking at the funds, they added 160 MB to their longs last week increasing them to 740 MB prior to the USDA report. They have since dumped a big portion of their position.
There is not much reason to be optimistic about the wheat crop in the southern Plains. Only 12 percent of the crop is rated in good-to-excellent condition in Kansas, while Oklahoma is 7 percent, and 13 percent for Texas. A soaking rain would help stabilize the crop, but there is nothing in the forecast for the next 7 days. Meanwhile, exports remain the Achilles heel with inspections last week at 14.3 MB. We need to ship 17.1 MB each week to reach USDA’s target of 925 MB. Looking at the funds, they covered 145 MB of their short position last week reducing it to 220 MB.
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