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Trade negotiations continue to run hot and cold between the U.S. and China with most under the assumption that it will be a while before they resolve their differences. In the meantime, business as usual goes on in the grains. Corn harvest in the southern periphery of the Midwest will begin after Labor Day with most looking for an above average yield, but probably not a record. Concerns of ear weight, kernel fill, and tipping indicate that one should not be expected. Last week, the rating for corn fell one-point to 71 percent of the crop in good-to-excellent condition. This compares to the 10-year average of 63 percent. Export inspections were 50.6 MB and are running short of the average needed to reach USDA’s target of 2.4 BB. Last week, the funds reeled in their shorts 410 MB reducing them to 315 MB.
Soybeans continue to be victimized by the trade feud with China. As mentioned in previous comments, they will rely upon South America for their needs until exportable supplies are diminished. In the meantime, eyes will be on weather for the rest of the month. Recent hot, dry conditions in much of the Midwest facilitated a 3-point drop in the crop rating to 67 percent in good-to-excellent condition. This compares to the 10-year average of 62 percent. However, even with the drop in ratings, we could still see record ending stocks. Looking at exports, inspections last week at 32.8 MB were the highest seen since May. Right now, shipments are running neck to neck in reaching USDA’s target of 2.085 BB. The funds were mostly inactive last week as they increased their shorts a modest 10 MB to 460 MB.
Wheat continues to float the boat in grains as values have surged 25 percent in a little over two weeks. Production concerns in Canada, Europe, Australia, and the Black Sea Region continue to underpin. Last week, the funds liquidated 145 MB of their short position leaving them flat. This is the first time since May 2014 that they have not been short. While exports are expected to improve, they are slow to come with inspections last week only 11.9 MB. In other developments, winter wheat harvest is winding down a 90 percent complete while spring harvest is 13 percent done.
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