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We are entering the growing season, and traders are searching for every tidbit of information that supports their view of the corn market’s direction. After a slow start in planting, progress is catching up with 62 percent of the crop in the ground, only one point below the average. Minnesota, however, continues to lag 25 percent behind their average. With global stocks down 18.3 from a year ago and demand rising 2.1 percent, a shortfall in production can be ill afforded. Looking at exports, inspections last week were robust at 61.1 MB and are on track to exceed USDA’s projection of 2.225 BB. With the fundamental outlook turning brighter in corn, the funds have increased their longs to 1.190 BB. While the tide is rising in the bulls’ favor, this is a sizeable position suggesting that much of the positive news may already be priced into values.
The trade spat between the U.S. and China continues to be the market’s focus. Traders are closely keeping tabs of the ongoing talks in Washington between them this week. Looking at exports, they have picked up the past three weeks with inspections last week at 25.2 MB. However, shipments are still running below the average needed to reach USDA’s projection of 2.065 BB. Keep in mind that if China’s usage rises 6.8 percent, as projected by the USDA, they will need U.S. soybeans later this summer. In other developments, soybean planting is making great strides at 35 percent done, well ahead of the average at 26 percent. Most of the major producing states are ahead except for Minnesota, which is running 26 percent behind. Looking at the funds, they reduced their longs 195 MB last week to 550 MB.
The fundamentals in wheat are turning slightly positive as world stockpiles are expected to fall 2.3 percent with U.S. stocks declining 10.7 percent. However, the process will be slow to get traction. There is a silver lining in that the USDA projects exports from the Black Sea Region to drop off 5.9 percent in 2018-19. They have been a thorn in our side and have been capturing the global market share of business the past few years. Meanwhile, the crop rating has improved the past couple of weeks to 36 percent in good-to-excellent condition, up 2 points from a week ago. Looking at the funds, they have slowly been reining in their shorts that currently stand at 130 MB.
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