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Corn harvest is just getting started at 5 percent complete, slightly behind the average of 6 percent. As it progresses and the crop goes into the bin, the focus will turn more to usage and weather in South America. Because of lower values, estimates are that 2-5 percent fewer acres of full season corn will be planted in Brazil. Although U.S. ending stocks are abundant at 2.3 BB, world supplies are projected to decline 10.8 percent according to USDA’s latest estimate. This implies that adverse weather in South America this fall or winter could bring the bulls out of hiding. Looking at exports, inspections the first week of the marketing year were less than inspiring at 26.0 MB. Meanwhile, the funds are turning more bearish as they increased their short position 160 MB to 705 MB. This is their largest position since late June.
Remnants of Irma pushing through the Midwest are easing concerns of dry conditions. Because of below normal temperatures the past few weeks, the soybean crop is slightly behind in development with 22 percent dropping leaves compared to the average of 25 percent. This should not raise an alarm as no frost is in the forecast for the next 10 days. As mentioned in the corn comment, 2-5 percent fewer acres of full season corn are expected to be planted in Brazil suggesting more acres of soybeans. The first export inspection of the marketing year was sterling at 40.6 MB. This was the greatest number seen since February. China took 22.7 MB, the highest level of shipments in many weeks. Looking at the funds, they trimmed their short position 80 MB to 250 MB.
There is little fresh news in wheat. Planting of winter wheat is just getting underway and is 5 percent complete compared to the average of 6 percent. With prices at current levels, producers have little incentive to plant unless they double crop with soybeans. Exports improved slightly last week with inspections of 16.4 MB. However, shipments were below the average needed to reach USDA’s projection of 975 MB. Russia will continue to be a strong competitor. The funds are getting more bearish as they added 25 MB to their short position increasing it to 525 MB. This is their largest position since June.
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