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This week, we got an insight into what may be lurking for the potential of this year’s corn crop. The first USDA crop rating of the season showed 65 percent of the corn crop in good-to-excellent condition. This compares to a rating of 72 percent a year ago and is the lowest rating since 2013. Back then, the final yield was 158.1 bpa. According to Ag Watch’s yield model, the current rating translates to a national yield of 167.9 bpa versus 174.6 bpa a year ago and USDA’s present estimate of 170.7 bpa. If conditions remain cool and damp as forecast through mid-June, problems with development may lie ahead. Looking at exports, inspections last week were sound at 47.0 MB with the pace of shipments showing the first uptick since late March. Meanwhile, the funds backed off on their short position last week reducing them 100 MB to 995 MB.
Soybeans got whacked on Tuesday when traders returned from Memorial Day with prices falling double digits. The record crop in Brazil, and expectations for record planting in the U.S. is apparently making a strong impression. As of last week, 67 percent of the crop was planted, just one point below the average. Meanwhile, because of wet conditions, Illinois, Indiana and Michigan are running 9, 17, and 12 percent below the norm. Looking at exports, inspections were 12.3 MB after seeing a slight uptick the previous week. The funds, in the meantime, are becoming more bearish as they added 150 MB to their shorts last week increasing them to 440 MB. This is their largest position since March 2016 and could be a blessing in disguise to the bulls as the bearish news has mostly been factored into values.
Wheat continues to wander in a narrow range as it is apparently waiting for harvest to begin. Yields remain a big question, especially with the crop rating falling 2 points last week to 50 percent in good-to-excellent condition. This trails last year rating of 63 percent. Meanwhile, the first rating for spring wheat put 62 percent of the crop in the good-to-excellent category compared to 79 percent a year ago. It appears that wet conditions in the upper Midwest has taken a toll. Looking at exports, inspections last week were 22.1 MB with cumulative totals for the season at 993.2 MB. Unless there is a huge number next week, they will fall short of USDA’s target of 1.035 BB. The funds have not been as aggressive the past couple of weeks as they reduced their short position 45 MB t0 700 MB.
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