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Corn got off to a shaky start this week pressured from reports of strong yields as harvest moves north. For the fourth consecutive week, the rating for corn stood at 74 percent of the crop in good-to-excellent condition. However, the ratings start to lose relevance when harvest begins. Ag Watch’s yield estimate is 171.6 bpa compared to USDA’s forecast of 174.4 bpa. Because of excessive rain in the upper Midwest last week, harvest is lagging at 15 percent complete compared to the average of 19 percent. Look for the pace to catch up as weather is open for the next several days. Exports remain brisk with inspections last week at 52. 5 MB. So far, shipments are running 54 percent above a year ago. Meanwhile, this has not deterred the funds bearish stance as they added 45 MB to their shorts last week increasing them to 835 MB.
The funds are probably squirming a bit as soybean futures are at their lowest point since early September. Last week, they added 25 MB to their longs increasing them to 285 MB. While this is not a big position, it is underwater and, and could pressure values further. For the fifth straight week, the rating for soybeans stood at 73 percent of the crop in good-to-excellent condition. Ag Watch’s yield estimate is 50.3 bpa compared to 50.6 bpa for the USDA. I am hearing of a few off the chart yields as high as 80 or 90 bpa. As of last week, 10 percent of the crop was harvested versus the average of 13 percent. While exports have been the shining star in soybeans, they fell well below estimates last week at 14.1 MB. This was the smallest inspection since July. Cumulative shipments are running 31 percent above a year ago, but the pace of shipments since mid-August has been declining. The concern is, if demand fizzles, the market will be caught between a rock and a hard spot because a record crop looms.
There is not a lot that can be said regarding wheat as it is taking its cue from corn and soybeans. While the fundamentals are not quite as negative as they once were, both domestic and world stocks are abundant. Planting is progressing on par with the average at 30 percent. Export inspections last week were a marketing year high of 32.1 MB with cumulative shipments running 26 percent above a year ago. Meanwhile, the funds are embraced in a bearish stance as they increased their short position 10 MB last week to 720 MB. This is short of the record set at 765 MB.
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