On The Money Grain Commentary 8-23-18

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Corn Outlook:

News is sparse in corn with traders focused mostly on the Pro Farmer crop tour and whether their findings will beat USDA’s yield estimate of 178.4 bpa as some speculate. Last week, the crop rating fell two points to 68 percent in good-to-excellent condition and compares to the 10-year average of 62 percent. Export inspections last week were reported at 43.1 MB and have fallen for 3 consecutive weeks. Harvest is just beginning in the southern areas of the Corn Belt but is slow because of high moisture content. Looking at the funds, they added 25 MB to their shorts increasing them to 235 MB. Corn should remain underpinned in the weeks ahead from increasing global demand and shrinking stockpiles.

Bean Outlook:

The trade U.S.-China trade dispute still dominates the news and continues to run hot and cold. A mid-level meeting is underway with trade representatives to restart negotiations. However, both parties have slapped a 25 percent tariff on $16 billion on each other’s products which is a poor way to begin negotiations. Keep in mind that the Shanghai Composite Index has fallen nearly 15 percent during the trade dispute which means their economy is taking a hit. Meanwhile, exportable supplies of Brazilian soybeans are dwindling and could be an incentive for China to come back to the table. In other developments, eyes are focused on the Pro Farmer crop tour and whether their findings exceed USDA’s yield estimate of 51.6 bpa. Last week, the crop rating slipped one point to 65 percent in good-to-excellent condition and compares to the 10-year average of 61 percent. Since the end of July, the ratings have fallen 5 percent. Export inspections last week were 23.4 MB with the pace of shipments running a tight race to meet USDA’s projection of 2.110 BB. Looking at the funds, they recently increased their short position 40 MB to 515 MB.

Wheat Outlook:

Reports circulated last week that Russia would curtail exports because of this year’s drought. However, they are backpedaling on their story which has caused prices to retreat. Chances are they will wait until this fall before curbs are initiated. In other developments, export inspections last week were mundane at 12.6 MB and have a lot of catching up if USDA’s projection of 1.025 BB is to be met. Spring wheat harvest is making headway at 60 percent complete compared to the average of 44 percent. Looking at the funds, they added 15 MB to their longs last week increasing them to 70 MB.

Since peaking last week at 582.75, December wheat has fallen below support at 549 to 535.5 on Thursday. Support is at 530-528 followed by 519. Currently, the cycles point to a bottom as soon as the end of the week or by August 30th. Rising past 555 suggests that a recovery to 576 or 585 could get underway. Closing beyond 595 brings into play the chance for trading to a new high. Next week, the odds are even as to whether December wheat will be higher or lower.

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