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Corn has been battered and bruised over the past few weeks from the trade war with China. The Trump Administration this week threatened to slap a 10 percent tariff on additional Chinese products. Bear in mind that China buys little U.S. corn. Non the less, the market has become a victim anyway. Consider this, global stocks are down 19.2 percent from a year ago, usage is forecast to be up 1.8 percent, but prices are down 16.2 percent. Fundamentally, the math does not add up. Hopefully, cooler heads will come around. In the meantime, the crop rating rose one point to 78 percent in good-to-excellent condition. Export inspections were solid at 65.6 MB. Looking at the funds, they dumped 275 MB from their longs last week reducing them to 425 MB. They are probably holding a token short position by now.
Soybeans have suffered an 18.4 percent decline from last month’s high resulting from the trade dispute with China. The Trump Administration is attempting to get the point across to China that you need our soybeans more than we need your computer parts! The Administration is sending a message that the trade imbalance will be reduced either through negotiation, or more difficult measures. In other developments, the crop rating fell one-point last week to 73 percent in good-to excellent condition. While the door is closing for a weather event to happen in corn, one could still occur in soybeans. However, conditions look benign going into early July. Export inspection saw an improvement last week at 30.0 MB. Meanwhile, the pace of shipments is running slightly below the level needed to reach USDA’s target of 2.065 BB. Last week, the funds sold 240 MB of soybeans and are now short 55 MB. Their position has likely grown this week.
Wheat has taken a beating in the trade dispute with China even though they purchase little U.S. wheat. Although yields have suffered in the Plains and Russia because of dry weather, it is being trumped by the escalation of tensions between the U.S. and China. Winter wheat harvest is getting into full swing at 27 percent complete compared to the average of 19 percent. Exports are off to a slow start this season with inspections last week at 13.6 MB. Looking at the funds, they are short a modest 60 MB.
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