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The bulls suffered a bad case of heartburn Monday as corn futures fell double digits from the forecast of rain late this week. While this offers short-term relief, the crop is a long way from being in the bin. Meanwhile, a lot of questions remain unanswered, such as acres lost to flooding and conditions during July. With world stocks down 13.5 percent from a year ago, you can count that volatility will be on the upswing. Last week, the rating for corn fell one point to 67 percent in good-to-excellent condition and compares to the 10-year average of 71 percent. Ag Watch’s yield model puts the national yield at 168.0 bpa versus USDA’s estimate of 170.7 bpa. Exports declined from the previous week to 41.0 MB, but are above the average needed to reach USDA’s target of 2.225 BB. The funds were active last week reducing their short position 265 MB to 855 MB.
Soybean planting is on the tail end at 92 percent done. USDA put out their first crop rating for the growing season at 66 percent in good-to-excellent condition. This is below the 10-year average of 68 percent. According to Ag Watch’s yield model, this equates to a national yield of 50.6 bpa versus USDA’s current estimate of 48.0 bpa. Right now, the item that catches my attention is that the funds added 50 MB to their short position last week increasing it to 620 MB. This is shy of the record set at 675 MB, but is a record position for the month of June. This implies that a good portion of the bearish news has been factored into values and that late comers may not be rewarded. Looking at exports, inspections improved over the previous week at 18.6 MB.
Wheat harvest is getting into full swing at 17 percent complete compared to the average of 15 percent. The rating for the winter wheat crop last week rose one point to 50 percent in good-to-excellent condition, but the spring crop was axed 10 points falling to 45 percent. This supported the market on Tuesday following Monday’s sell-off. Keep in mind that the funds are short 700 MB and could get nervous if the spring wheat conditions continue to deteriorate. Looking at exports, the first full week of the marketing year had inspections at 28.4 MB.
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