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The buzz in the ag circles lately is the new trade agreement with Mexico that replaces NAFTA called the U.S.-Mexico Trade Agreement. Canada was not included in the agreement, but talks with them are expected soon. The deal made with Mexico may act as an incentive that could bring China back to the negotiating table. While the new agreement is bullish long-term for the grains, they have had a muted response, thus far, as the market is focused on a record yield this fall. Corn harvest has begun in the southern portions of the Midwest with impressive yields being reported. Last week, the crop rating for corn stood at 68 percent in good-to-excellent condition, unchanged from the previous week. Export inspections improved slightly to 49.0 MB. Last week, the funds trimmed their short position 60 MB to 175 MB.
Being bullish soybeans seems like a lost cause as a record harvest looms, plus an outbreak of swine flu reported in China could put a dent on global demand. Meanwhile, Brazil is expected to increase acreage 3-4 percent for 2018-19. While weather is always a hot topic, when their planting begins, it may be of greater importance this season because they have had three record crops in a row. The max is four years. This could be the year that their blessings from Mother Nature come up empty handed. The U.S.-China trade dispute continues, but the USDA aid package offering growers $1.65 per bushel on 50 percent of their production is helping ease the pain from the decline in prices. In other developments, the crop rating gained one-point last week at 66 percent in good-to-excellent condition. Export inspections at 33.1 MB were the highest since early March. The funds were less aggressive last week as they reduced their shorts 95 MB to 420 MB.
Global stockpiles of wheat are shrinking which should eventually catch the bulls’ interest. Meanwhile, rumors resurfaced mid-week that Russia may cap exports sparked a double-digit bounce. Meanwhile, spring wheat harvest is progressing quickly at 77 percent complete compared to the average of 61 percent. Export inspections saw a boost at 17.9 MB, which was a marketing year high. However, the pace must accelerate to reach USDA’s projection of 1.025 BB. The funds were mostly inactive last week and hold a long position of 65 MB.
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