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Producers in the eastern Corn Belt are getting a reprieve from the torrential rainfall that caused flooding in many areas a couple of weeks ago. Right now, the question is whether the soils will dry out fast enough for replanting, or will it become a preventative plant issue? This will keep traders guessing in the days ahead. In the meantime, 47 percent of the crop is planted compared to the average of 52 percent. USDA gave us our first glimpse at the 2017-18 crop with production projected at 14.065 BB and ending stocks of 2.110 BB. World stocks saw their greatest drawdown since 1988 and first reduction since 2010. Export inspections were disappointing last week at 28.3 MB, and below the average needed to reach USDA’s target of 2.225 BB. Last week, the funds lightened their shorts 60 MB reducing them to 990 MB. However, this is still a sizeable position and gives little wiggle room in the event of adverse weather this summer.
If everything goes well with Mother Nature this season, a huge soybean crop is in the making as USDA’s projects production at 4.255 BB and ending stocks for 2017-18 at 480 MB. However, we all know that Mother Nature sometimes does not cooperate. Meanwhile, planting is running only slightly behind at 14 percent complete versus the average of 17 percent. Export inspections were a flop last week at 12.8 MB, a marketing year low. Since November, shipments have fallen 82 percent. This trend will likely continue, especially with the availability of a record South American crop. Looking at the funds, they trimmed their short position 30 MB to 350 MB. This could grow if weather does not become a factor during the growing season.
The freak snow storm in Kansas in late April has not deterred the bears as global stocks remain abundant. Furthermore, we will be into harvest before the extent of yield loss and acres abandoned can be determined. In the meantime, the ratings fell one point to 53 percent in good-to-excellent condition and compares to 62 percent a year ago. The ratings for Kansas and Nebraska fell 6 and 14 percent. Export inspections were considered routine last week at 22.5 MB. USDA projects wheat production falling to 1.246 BB with 2017-18 ending stocks of 914. Meanwhile world stocks are a tad higher for 2017-18 at 258.3 million tons. Looking at the funds, they reduced their short position 190 MB last week to 755 MB, but recent weakness implies that they have added back to it.
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