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For weeks, speculation has proliferated pertaining to crop losses in Argentina arising from their drought. USDA has shed some light on their situation as they lowered their crop 3.0 million tons to 36.0 million. Many think that it will fall even further. Brazil’s crop was down 500,000 tons to 94.5 million. This led to world stockpiles falling 3.9 million tons to 199.2 million. Meanwhile, U.S. ending stocks were down 225 MB to 2.127 BB from an increase in exports. This was below the lowest trade guess. Export inspections were run of the mill last week at 37.3 MB. Looking at the funds, they have become aggressive by increasing their longs 250 MB to 465 MB. This is their largest long since July 2016.
Weather in Argentina continues to be the topic of discussion as conditions continue to decline. USDA lowered their soybean production estimate 7.0 million tons to 47.0 million. Meanwhile, Brazil’s crop was up 1.0 million tons to 113.0 million. U.S. ending stocks were up 25 MB to 555 MB which was above the average guess. Exports picked up a bit last week with inspections at 36.3 MB. However, China only took 9.4 MB, their lowest shipment since early in the marketing year. Since November, the pace of shipments has fallen 58 percent and will likely decline to 85 percent if we follow the norm. Looking at the funds, they boosted their long position 250 MB to 580 MB. This is their largest position since March 2017.
Deteriorating conditions in the Plains continues to underpin wheat. USDA projects world ending stocks at 268.9 million tons, up 2.8 million. U.S. ending stocks are forecast to rise 25 MB to 1.034 BB. Long story short, there is no shortage of wheat. Exports remain a sore spot as Russia continues to garner the lions share of business to Egypt. Inspections last week were only 14.7 MB. Looking at the funds, they reined in 50 MB of their short position reducing it to 365 MB.
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