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Grain futures got a boost this week from the U.S. and China returning to the drawing board in their trade talk negotiations. Give credit to President Trump in that while he has probably never stepped in a horse pile, he certainly knows how to horse trade! While corn will reap some benefit from the negotiations, soybeans stand to gain more. Meanwhile, planting is winding down at 81 percent done. Exports saw another stellar week with inspections at 60.1 MB. Right now, we are on track to ship 2.380 BB versus USDA’s projection of 2.225 BB. Looking at the funds, they have reduced their longs to 1.065 BB. This is still a sizeable position and bullish input will be needed for it to grow. However, the growing season still lies ahead.
Traders are ecstatic hoping that easing of tensions with China will bring them back to the table for U.S. soybeans. However, this should be treated with caution as the USDA has already factored in a 10.8 percent increase in exports for 2018-19 meaning there may not be a lot of room for more improvement. Last week, export inspections were 32.8 MB with China taking only 4.8 MB. Long story short, we need to see China step up to the plate with purchases to feed bullish interest. In other developments, planting is progressing quickly with 56 percent of the crop in the ground compared to the average of 44 percent. Even the states that are lagging made considerable progress. Looking at the funds, they reduced their longs to 445 MB last week.
Wheat is being supported from drier conditions forecast in the southern Plains, in addition to weather problems in Australia, Canada, and the Black Sea region. Last week, the winter wheat crop held a steady rating of 36 percent in good-to-excellent condition. While crop prospects are diminished, lagging exports continue to be an overhanging factor. Inspections last week were 12.5 MB and must average 15.6 MB each week to reach USDA’s projection of 910 MB. Right now, we are looking at a photo finish. Meanwhile, the funds turned slightly more bearish as they increased their short position 65 MB to 190 MB.
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