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After Memorial Day weekend, every weather forecast will be scrutinized under the microscope as the corn crop will be planted, but a long way from being in the bin. As of last week, 84 percent of the crop was in the ground, which was slightly more than traders had expected. Meanwhile, I am hearing that record replanting may be necessary in Illinois and other areas because of excessive wet conditions. Traders will be especially sensitive to weather as global stocks are forecast to decline, while the U.S. crop is off to a less than perfect start. Currently, the funds are short 1.095 BB. If they sense that they are on the wrong side of Mother Nature, the exit could become crowded. Looking at exports, inspections fell below the previous week at 45.0 MB, but were above the average needed to reach USDA’s projection of 2.225 BB.
Soybeans seem to be following corn and wheat, but are keeping a close eye on the corruption scandal involving Brazil’s president and the meat packing company JBS. If the Brazilian Real weakens, it could increase sales from their producers. Since the news broke last week, the Real saw a sharp drop, but has since stabilized. Meanwhile, planting in the Midwest is 53 percent done which is one point above the average. Michigan and Nebraska are lagging, however, at 10 and 9 percent below their average. Exports are nothing to get fired up about as inspections were 12.8 MB last week. Since November, the pace of shipments has fallen 86 percent, which is above the norm of 83 percent. Looking at the funds, they were mostly inactive last week, but did trim their short position a modest 5 MB to 755 MB.
It will be interesting when wheat harvest begins, as the story will be told regarding abandoned acres and yield loss. In the meantime, the rating improved one point last week to 52 percent of the crop in good-to-excellent condition. However, this was below last year’s rating of 62 percent. Spring wheat planting is winding down at 90 percent done versus the average of 84 percent. Looking at exports, inspections last week were 24.7 MB and below the average needed to meet USDA’s target of 1.035 BB. We need some big numbers the next two weeks for it to reached. The funds are not going to be coerced in giving up their short position easily as they added 70 MB last week increasing it to 755 MB.
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