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The corn crop is a lot like a patched quilt in that conditions vary. The upper Midwest and portions of the west have been plagued with hot, dry conditions, while the east is looking mostly at a decent crop. Last week, the crop rating fell one point to 64 percent in good-to excellent condition and compares to the 10-year average of 65 percent. Ag Watch’s yield model has the national yield at 164.8 bpa versus USDA’s estimate of 170.7 bpa. A trendline yield this year is probably not in the cards. Last week, the funds did a complete 180 turnaround as they flipped from a short position of 415 MB to a long of 250 MB. Bullish input is needed for them to build on this position. Looking at exports, inspections were respectable at 43.6 MB. Until we get past pollination later this month, the market will be prone to flip flopping at the scrutiny of each weather forecast.
At times this season, soybeans have been the leader of the grains. At others, however, they have followed wheat and corn. With South America sitting on a record soybean crop, and U.S. stocks-to-usage at its highest level since 2006, one cannot expect them to display the sole leadership. Right now, traders are focused on weather and the ratings, which have deteriorated during the past 4 weeks. Last week, the rating for soybeans fell one point to 61 percent of the crop in good-to-excellent condition. This is below the 10-year rating of 62 percent. According to Ag Watch’s yield model, the national yield is 49.6 bpa versus USDA’s estimate of 48.0 bpa. Last week was an active week for the funds as they shed 400 MB of their short position reducing it to 120 MB. Right now, they are probably flat, and may have a token long. Looking at exports, inspections last week were anemic at 10.5 MB. Over the next few weeks, market conditions will likely remain volatile until we are out of the bloom and pod setting stage.
Spring wheat carried the load for winter wheat for several weeks, but that is over. Last week, the rating for spring wheat fell one-point to an all-time low of 34 percent of the crop in good-to-excellent condition. However, with world stocks-to-usage at a 20-year high, winter wheat is only going to get so much mileage from the spring crop. Last week, the funds dumped 110 MB from their short position reducing it to 80 MB. Meanwhile, harvest is wrapping up at 75 percent done, which is 2 points above the average. Export inspections picked up 21.2 MB following 5 weeks of decline.
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