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When April arrives, the focus in corn turns to weather, planting, and the growing season. During this time, there are numerous “what ifs” and predictions made by analysts and weather gurus for the upcoming season. Usually, the funds have established a token long position by now, but as of last week, they were short 745 MB, their largest position since last October. When that occurred back then, corn futures advanced nearly 30 cents over the next few months. Although stocks are abundant, the question is will the funds risk holding their shorts through spring-summer? One of the brighter spots in corn has been exports. Inspections last week were the third largest of the season at 58.0 MB. Since January, the pace has risen 75 percent and are on track for meeting USDA’s target of 2.225 BB.
For months, the funds had a hot, torrid love affair for soybeans. Well, no more! Since March, prices have plunged nearly 11 percent in value. In late January, the funds were long 770 MB of soybeans, but have since slashed their position to a mere 55 MB. Last week alone, they liquidated 110 MB. Right now, the market does not seem to have many perks. Planted acres are expected to be a record 89.4 million, some forecasts for Brazil’s crop are as high as 114.3 million tons, and exports have fallen 76 percent since November. Although recent flooding in Argentina has raised a few concerns, it is being offset by Brazil’s increasing crop size. Long story short, soybeans are facing an uphill struggle unless Mother Nature decides differently this summer.
The slide in wheat since March may be trying to turn the corner as a drier pattern is forecast in Europe and Russia for the next couple of weeks. Currently, the funds are short 790 MB, which is shy of the record of 825 MB. When the funds covered their position at that time, prices rose 68 cents. Although recent rainfall in the Plains will improve conditions, April and May are critical months for development. The first progress report of the season rates 51 percent of the winter wheat crop in good-to-excellent condition versus 59 percent a year ago. Looking at exports, inspections last week were 20.5 MB and must average 24.8 MB each week to reach USDA’s target of 1.025 BB.
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