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Cool, wet conditions this spring have kept fieldwork at a crawl. Corn planting is only 3 percent done compared to 6 percent a year ago and 5 percent for the average. Missouri is running 14 percent behind their average. Other supportive factors are fewer acres expected to be planted, while exports have been improving over the past several weeks and currently on track to reach USDA’s target of 2.225 BB. In addition, global stockpiles are down 14.3 percent from a year ago. While these issues will continue to underpin corn longer-term, the fund long position has grown to 1.020 BB, the largest for April since 2011. At that time, corn futures were at 780. What this tells us is that much of the positive influences have been factored into values, and a fresh storyline may be needed to push them higher.
Concerns regarding China’s import tariff on U.S. soybeans remain but are not as intense as a few weeks ago. As I have mentioned in previous comments, their interest will return in late summer. Keep in mind that they cannot feed their livestock industry without sourcing the U.S. Recently, the market has swirled because of Argentina’s purchase of U.S. soybeans. This may only be a one-time transaction, but we cannot rule out there being more. Looking at exports, inspections last week were ho-hum at 16.3 MB. Since November, the pace has fallen 80 percent with the average being 85 percent until the end of the marketing year. Last week, the funds were largely inactive and trimmed their long position a modest 10 MB to 710 MB.
One may question why wheat values have struggled as the winter wheat crop has deteriorated to its lowest rating since 1996. Only 31 percent of the crop is in good-to-excellent condition, up one point from last week. The problem with wheat is twofold. One, global stocks are at a record, up 6.5 percent from a year ago. Two, exports have been diminished because of competition from the Black Sea Region and Ukraine. Inspections last week were modest at 17.7 MB with shipments on track to reach 895 MB versus USDA’s projection of 925 MB. Looking at the funds, they took some profits last week reducing their short position 85 MB to 290 MB.
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