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Optimism is creeping into the grains that differences between our trading partners, primarily the EU and Mexico, may be settled soon. Meanwhile, China has stated that they do not want a trade war but resuming negotiations has been a hot and cold affair. In other developments, the crop rating for corn has stood at 72 percent in good-to-excellent condition for the third consecutive week. While this is supportive of a record yield, there are concerns of ear weight and filling in some areas. The August 10th Crop Report may shed light on this. Meanwhile, it was another good week for exports with inspections at 65.2 MB. Looking at the funds, they added 55 MB to their shorts last week increasing them to 725 MB.
The question surrounding China is will they come back for U.S. soybeans.? As mentioned before, they generally source South America for their needs until late summer. However, with a record crop in Brazil, they might be able to stretch that a bit further. Be aware that they cannot feed their livestock industry from South America and alternative proteins alone. China’s worst nightmare would be if Brazil produces a subpar crop this winter. My thoughts are they will make some concessions with the Trump Administration to avoid having their back against the wall in the event of that happening. Meanwhile, U.S. shipments are finding their way to other homes. In other developments, the crop rating for soybeans remained at 70 percent in good-to-excellent condition for the second straight week. Export inspections were 27.2 MB and are running neck to neck in reaching USDA’s projection of 2.085 BB. The funds turned a bit more bearish as they added 30 MB to their shorts last week increasing them to 450 MB.
Wheat has been on a rampage higher the past few weeks supported by declining production prospects in Canada, Europe, Australia, and the Black Sea Region. Eventually, this will swing export business to the U.S., but it is slow in coming. Inspections last week were a modest 13 MB. Winter wheat harvest is winding down at 85 percent complete, but spring wheat cutting has just begun at 4 percent done. The rise in futures has caused funds to cover shorts as they reduced their short position 45 MB last week to 145 MB.
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