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Grain futures managed to muster a modest bounce early this week, but bargain hunters are keeping an arm’s length as they have been burned too many times picking bottoms. Each time the U.S.-China tariff drama seems like it can get no worse, a new wrinkle develops. Although, the corn rating was down 3 points last week to 72 percent in good-to-excellent condition, it remains above the 10-year average of 66 percent. However, the ratings this season may be deceptive because much of the corn crop was pollinating when we had elevated day and night time temperatures. This could show up in the August field surveys. Meanwhile, exports are robust, but inspections were disappointing last week at 47.9 MB, their lowest since March. Looking at the funds, they have increased their shorts to 370 MB.
Soybeans rebounded early this week, but traders are cautious as tariff negotiations between the Trump Administration and China are at an impasse. This will take a while to be resolved as no one is willing to blinking first. Meanwhile, weather looks favorable through the end of the month which is keeping many bargain hunters at a distance. Last week, the rating for soybeans fell 2 points to 69 percent in good-to-excellent condition but remains above the 10-year average of 62 percent. Export inspections were nominal at 23.3 MB and below the average needed to reach USDA’s projection of 2.085 BB. Last week, the funds lightened their shorts 30 MB to 360 MB.
Wheat is being underpinned from a smaller crop forecast in the EU and the Black Sea Region along with a reduction in exports. Expectations are this might eventually swing business back to the U.S. Last week, inspections were a marketing year high at 17.2 MB, but are running well short of the average needed to reach USDA’s projection of 975 MB. Winter harvest in in the home stretch at 74 percent complete versus the average of 71 percent. The rating for spring wheat remained unchanged last week at 80 percent of the crop in good-to-excellent condition. The funds were inactive last week as their short position was unchanged at 125 MB.
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