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Corn is finally scaling the mountain. For nearly four months, the market resided in a broad trading range searching for a direction, but broke out to the upside of that range this week. The crop is off to subpar start, and the funds are sporting a near record short position of 1.120 BB. Last week’s crop rating improved 3 points to 68 percent in good-to-excellent condition. However, it is still below the 10-year average of 71 percent. That said, the funds may be forced to scramble, especially with above normal temperatures in the forecast for the next seven days, and some places in the west not seeing rain in over a week. In other developments, export inspections were solid at 46.3 MB and above the average needed to reach USDA’s projection of 2.225 BB.
Soybeans have rebounded as most of the bearish news seems to have been factored into values. This comes on the heels of a record harvest in South America, record planting expected in the U.S., plus ending stocks for 2017-18 possibly topping 500 MB. However, this has been widely talked about within the trade circles for several weeks and is old news. The sore spot that continues to plague the market is exports, which have been declining since last November. Inspections last week were a marketing year low of 10.1 MB. However, that failed to generate any selling interest. Meanwhile, planting is winding down at 83 percent complete. Looking at the funds, they added 130 MB to their shorts last week increasing them to 570 MB. They have not had a short position of this magnitude during June in over 14 years. With the market turning up, they are probably getting a little squeamish.
Wheat is finally getting some traction after being rangebound for three weeks. Support is coming from the crop rating for winter wheat falling one point to 49 percent in good-to-excellent condition. This is well below last year’s rating of 62 percent. Meanwhile, the rating for spring wheat took a nose dive falling 7 points to 55 percent in good-to-excellent condition, and is down from a rating of 79 percent a year ago. While spring wheat only comprises 15 percent of the total wheat crop, it could be the catalyst that causes the funds to cover their shorts. Last week, they added 30 MB to their position increasing it to 730 MB. With harvest just getting underway at 10 percent complete and yields questionable, it puts the funds in an uncomfortable spot. Looking at exports, inspections were a nonevent at 19.2 MB.
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