On The Money Grain Commentary 6-29-17

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Corn Outlook:

Corn needs a story to tell, but cannot seem to latch on to one. Maybe, it will find it in the Grain Stocks and Acreage Report. If not, it could be a long and lackluster summer. Right now, weather is benign in most of the Midwest, but warmer temperatures are predicted after July 4th. Offsetting the warmer temperatures somewhat is the forecast for above normal rainfall in the East. Last week, the rating for corn stood unchanged at 67 percent of the crop in good-to-excellent condition. According to Ag Watch’s yield model, the national yield is 168.0 bpa versus USDA’s estimate of 170.7 bpa. While it is not a spectacular crop, neither is it a bust. Last week, the funds became more aggressive increasing their short position 150 MB to 475 MB. Export inspections were adequate at 38.0 MB, and above the average needed to reach USDA’s projection of 2.225 BB.

Bean Outlook:

What was said about corn can pretty much be summed up for soybeans. Weather is currently not a big factor, but that could change sometime in July or August. Last week, the crop rating fell one point to 66 percent in good-to-excellent condition. However, it remains above the 10-year average of 65 percent. According to Ag Watch’s yield model, the national yield is 50.6 bpa compared to USDA’s estimate of 48.0 bpa. Either way you look at it, we are probably looking at a trendline yield, unless Mother Nature has other plans. Last week, the funds were more aggressive increasing their shorts 50 MB to 580 MB. While considered a large position, it is 100 MB below the record. Looking at exports, they were uninspiring at 11.5 MB with shipments running tongue and cheek with the pace needed to meet USDA’s target of 2.050 BB.

Wheat Outlook:

Spring wheat has been on fire with winter wheat riding on its coattail. Last week, the rating of spring wheat fell to 40 percent of the crop in good-to-excellent condition. The 10-year average is 72 percent. The factor limiting winter wheat is that spring wheat is only 15 percent of the total crop, plus global stocks are abundant. Meanwhile, there are some issues developing with the crop in France, Ukraine, and Australia that may come to light later. Last week, the funds liquidated 235 MB reducing their short position to 375 MB, and probably have more on the chopping block. Looking at exports, inspections were routine at 23.1 MB.

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