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At current values, the bears are assuming a couple of big if’s. One is that planted corn acres will be near 91 million, and the other is that yields will top 170 bpa for the second consecutive year. We will have an answer to the acreage question tomorrow, but the yield still rests in the hands of Mother Nature. In the meantime, the funds have increased their shorts 260 MB to 385 MB, their largest position since last November. Shortly after that time, corn futures rebounded 28 cents. Keep in mind that the growing season is still ahead and above normal temperatures are forecast for April-June. The question is, will the funds stay short during that period? Looking at exports, inspections last week were a marketing year high of 61.2 MB. Since January, the pace has increased 74 percent.
Right now, the prospects for soybeans do not seem very bright. Planted acres are expected to be up, the crop in South America is getting bigger, and exports are slipping. We will have greater insight to planted acres tomorrow. Meanwhile, harvest in Brazil is nearly 70 percent complete and is just beginning in Argentina with good yields being reported. Looking at exports, they continue to slide with inspections last week at 20.3 MB. Since November, the pace has fallen 74 percent. Historically, the average decline from the peak to the end of the marketing year is 83 percent, which means that weekly exports could slip to 13 MB. Since late January, the funds have turned sour on soybeans as their long position has fallen from 770 MB to 165 MB as of last week. Last week alone, they liquidated 170 MB.
Wheat futures have been meeting a headwind from the forecast of rain in the southern Plains and abundant global stockpiles. Freezing conditions in the Midwest a couple of weeks ago have not gotten a great deal of attention. However, I am hearing reports from producers that yields may be cut 20-30 percent. Meanwhile, the funds are turning up the heat as they added 70 MB to their short position last week increasing it to 670 MB. This is their largest position since December. When they overloaded the boat back then, the market rebounded 68 cents. Looking at exports, inspections last week were 19.9 MB and below the average needed to reach USDA’s target of 1.025 BB. We need to ship 24.4 MB each week to meet their projection.
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