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Corn will likely go into a state of limbo for the next several weeks. Weather looks benign for the rest of the month and traders are still reeling from the bomb dropped by the USDA in the crop report last week. Right now, there is little incentive for the bulls to step up to the plate, plus the bears may be unwilling to press short side of the market at these levels. Hopefully, the USDA will set the record straight in their yield estimate next month. If not, traders will probably look at the ratings report as an irrelevant tool. Last week, the corn rating rose 2 points to 62 percent of the crop in good-to-excellent condition. According to Ag Watch’s yield model, this equates to a national yield of 163.0 bpa versus USDA’s estimate of 169.5 bpa. Export inspections were run of the mill at 29.7 MB. Looking at the funds, they have flipped from a long position and are now short a token 10 MB. Adding to it at these levels could be a risky proposition.
What has been said about corn pretty much applies to soybeans. They will likely go into a state of limbo for the next few weeks. Weather is becoming a nonevent, which offers little encouragement for the bulls. The crop rating for soybeans slipped one-point last week to 59 percent of the crop in good-to-excellent condition. According to Ag Watch’s yield model, this translates to a national yield of 49.1 bpa compared to USDA’s estimate of 49.4 bpa. Export inspections were disappointing at 20.9 MB and below the average needed to reach USDA’s projection of 2.150 BB. The bright spot was that China took 10.3 MB, the highest level seen in several weeks. Looking at the funds, they added 95 MB to their short position last week increasing it to a modest 135 MB.
Wheat has become the outcast of the grains as traders see little light at the end of the tunnel. However, this is usually when we start to scrape the bottom of the barrel. Keep in mind that at current values, there is little incentive for producers to plant a crop this fall. Meanwhile, spring wheat harvest is in full swing at 40 percent done compared to the average of 35 percent. Export inspections were 18.7 MB and above the average needed to reach USDA’s target of 975 MB. Last week, the funds added 115 MB to their short position increasing it to 310 MB. With values at their lowest level since April, it brings up the question as to how much further they will press them.
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