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An unusual situation is unfolding in corn. The traditional funds, also known as trend following funds, are short 765 MB. This is their largest position since last October. However, the index funds, a close cousin, are long 1.485 BB, their smallest position since June 2009. For the past couple of weeks, the index funds have been increasing their longs. Meanwhile, the traditional funds continue to add to their shorts. Something will give in this situation. With planting progress off to a slow start at 6 percent, a wet pattern in much of the Midwest next week may force the traditional funds to cover shorts if the index funds continue to add to their longs. It will be interesting when the friction develops. In other developments, export inspections at 52.8 MB were above the average needed to reach USDA’s target of 2.225 BB.
Soybeans face a strong headwind from expectations for increased plantings in the U.S., and a record crop in Brazil of 111.0 million tons that seems to be getting bigger. Currently, they are 87 percent done with harvest, which implies that their crop will soon be hitting the export channels. Export shipments saw a brief uptick a couple of weeks ago, but the pace has turned down again with inspections of 15.8 MB last week. This was the second smallest export shipment since the marketing season began in September. Looking at the funds, they increased their shorts 135 MB last week to 270 MB. There is plenty of room for their position to grow.
The bears are keeping a tight rein on wheat as the funds are short 790 MB, which is just shy of the record set at 825 MB. The crop rating improved one point to 54 percent in good-to-excellent condition, which is above the 10-year average of 48 percent, but below last year’s rating of 57 percent. Nineteen percent of the crop has headed compared to the average of 13 percent. However, Arkansas is 60 percent above its average with Missouri, Oklahoma, and Texas running 12-16 percent above their average. This reflects the accelerated development because of warm conditions during February-March. Looking at exports, inspections last week were 24.6 MB and below the average needed to reach USDA’s projection of 1.025 BB. Right now, it will be a stretch to achieve their projection.
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