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Corn futures are beginning to show some resilience as bargain hunters are probing for a bottom amid shrinking global supplies. Demand is strong and should improve as livestock numbers are rising. The stalemate between the U.S. and China remains a thorn in the side of the bulls, but they have accepted that it may not be resolved soon. We are early in the marketing year for exports with inspections showing promise at 49.7 MB. Harvest is getting into full swing at 16 percent complete versus the average of 11 percent. Prices may not show much additional improvement until the crop is locked away in the bin. A supportive factor for corn is that the funds added a whopping 445 MB to their shorts last week increasing them to 880 MB. Those positions are currently under water.
Soybeans have held up well recently even though the trade spat continues with China and the outbreak of African swine flu is a concern. As mentioned in a previous comment, China will likely not show interest in negotiations until after mid-term elections. If the Democrats regain Congress, they are hopeful that the import tariffs will be removed. In other developments, harvest is getting underway at 14 percent complete compared to the average of 8 percent. Expectations are that the USDA will increase their yield estimate in October. Export inspections were 25.4 MB with Mexico and Europe picking up some of the business lost to China. Last week the funds added 25 MB to their short position increasing it to 640 MB.
Wheat is being underpinned from the drought in Australia and recent frost lowering production prospects. Winter wheat planting is moving along at 28 percent complete, slightly above the average of 26 percent. Export inspections were 15.0 MB and need to average 21.8 MB each week to reach USDA’s target of 1.025 BB. The Black Sea Regions continues to get the lion’s share of global exports. Looking at the funds, they have been active as they recently increased their shorts 65 MB to 185 MB.
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