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Trade negotiations between the U.S. and China may be more unpredictable than weather this growing season. In our latest drama, the Trump Administration plans to go ahead and implement imports tariffs on tech goods. As I have mentioned before, negotiations between them will run hot and cold. In other developments, corn planting is winding down at 92 percent done with the first crop rating of the season at 79 percent in good-to-excellent condition. This is the second highest rating on record following 1992 at 80 percent. Meanwhile, exports continue to shine with inspections last week at 67.1 MB. Currently, shipments are on track for exports of 2.420 BB versus USDA’s projection of 2.225 BB. Looking at the funds, they increased their longs to 1.080 BB last week. This is a large position and implies that much of the good news may be priced into values.
Soybean planting is headed into the homestretch at 77 percent complete versus the average of 62 percent. The long-range weather forecast for June, July, and August shows normal to above normal temperatures in most of the Midwest accompanied with normal moisture in the west and above normal precipitation in the east. Not much here for the bulls to grasp. If this forecast comes to fruition, a sustained rally this summer may hinge more on the trade negotiations between the U.S. and China. With their relationship on again, off again, the poker stakes are high. Turning to exports, inspections last week were 21.1 MB and below the average needed to reach USDA’s target of 2.065 BB. China took a meager 5.1 MB. Looking at the funds, they reduced their longs to 385 MB last week. They could quickly add back to their position, but positive input will be needed.
Hot, dry conditions in the southern Plains along with weather problems in the Black Sea Region have been supportive of wheat. However, the break in values this week imply that they are probably priced into values. Last week, the crop rating for winter wheat improved 2 points to 38 percent in good-to-excellent condition, the second consecutive week the ratings have risen. This implies that the bleeding has stopped and may have been the factor causing the market’s downturn. Meanwhile, exports are of no help with inspections last week at 15.8 MB. Looking at the funds, they have reduced their longs to 145 MB.
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