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Mother Nature has dealt the bears a hand that may eventually force them to fold. Since March, the funds have aggressively leaned on corn increasing their short position to 1.050 BB, the largest in nearly a year. However, flooding throughout the Midwest last weekend raises concerns that the crop may be getting off on the wrong foot. Replanting will be necessary in many areas, while below normal temperatures forecast through mid-May in the East could pose problems down the road. As of last week, 34 percent of the crop was planted which is par for the average. Progress over the next few days will lag until soils dry out. Looking at exports, inspections last week were 43.0 MB and above the average needed to reach USDA’s projection of 2.225 BB. Due to possible problems with the crop this early, the funds will likely become less aggressive in their stance.
While flooding in portions of the Midwest will probably lead to more soybean acres being planted, the market rose early this week riding on the coattails of wheat. Planting is off to a quick start at 10 percent complete versus the average of 7 percent. Meanwhile, exports remain a drag with inspections last week at 19.1 MB. Since shipments peaked last November, the pace has fallen 78 percent. Shipments generally decline by 83 percent. Looking at the funds, they increased their short position 10 MB last week to 380 MB. They will likely add to their position, especially if more acres are switched from corn.
Flooding in the Midwest, plus a winter storm in western Kansas caused wheat futures to leap this early this week. Meanwhile, prices tumbled Thursday from reports that the damage from snow may be limited. It will take a couple of weeks before this is sorted out. In the meantime, be advised that the funds are sporting a record short position of 945 MB and may be boxing themselves into a corner. The ratings stood unchanged last week at 54 percent of the crop in good-to-excellent condition and compares to a rating of 61 percent a year ago. However, the ratings did not take into account last weekend’s snow storm. Export inspections were routine at 21.1 MB and below the average needed to reach USDA’s target of 1.025 BB.
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