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Grain futures continue to feel the aftershock from the trade rift between the U.S. and China. The leadership of both countries are confident they hold the upper hand meaning it will take time and serious negotiation before they come to an agreement. While the trade spat has unnerved many, it has created fire sale prices and opportunity for others. In light of the fracas, corn exports remain strong with inspections last week at 59.5 MB. Cumulative shipments for the season are on track to exceed USDA’s projection of 2.3 BB. In other developments, the heat is on into July which may impact yields, but showers are in the forecast as well. Last week, the crop rating for corn slipped one point to 77 percent in good-to-excellent condition but is above the 10-year average of 68 percent. Looking at the funds, they have trimmed their longs to 175 MB.
The potential trade war with China continues to plague soybeans amidst fear that they will exclude the U.S. in favor of South America for meeting their needs. That might be the case short term, but China will have to look to other sources when South America’s supplies run out. Those other sources would be India and South Korea, plus a few others. However, they pale in comparison to the U.S. in being able to meet China’s needs. Meanwhile, exports are struggling with inspections last week at 18.8 MB. It is going to be a tight race in meeting USDA’s projection of 2.065 BB. While weather could be a factor in July because of hot temperatures in the forecast, the crop rating last week was unchanged at 73 percent in good-to-excellent condition, which is one-point above the record set in 2016 of 72 percent. Looking at the funds, they have increased their short position to 265 MB.
Wheat has mostly been a spectator on the sidelines as the trade friction between the U.S. and China offers resistance. Although the tensions pose limited impact, it is keeping potential bargain hunters at bay. Harvest is progressing quickly at 41 percent versus the average of 33 percent. Exports remain a sore spot with inspections last week an unimpressive 12.9 MB. Meanwhile, the funds turned more bearish as they increased their shorts to 185 MB.
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