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Corn harvest is getting underway in the Midwest with record yields expected in many areas. However, bearish ideas of a big crop are being offset by the tightest stocks-to-usage since 1973-74. This leaves little room for a production shortfall in South America or the Midwest in 2019. Looking at exports, inspections last week were 52.5 MB. Last week’s crop rating fell one-point to 67 percent in good-to-excellent condition. The crop is well ahead in development at 22 percent mature compared to the average of 11 percent. In other developments, the funds added 235 MB to their short position increasing it to 410 MB. Not much may transpire in corn until harvest is well underway or weather becomes a factor in South America.
It is difficult to find much bullish news in soybeans with the harvest of a record crop just around the corner. Another factor looming is the outbreak of African swine flu in China that could result in culling as much as 10 percent of their herd which would diminish demand for meal. While trade negotiations with China remain at a standstill, there are ideas that they are closer to coming back to the table because of the U.S. inking of a trade agreement with Mexico, in addition to negotiations with Canada. In other developments export inspections last were 28.2 MB. Last week, the crop rating stayed unchanged at 66 percent in good-to-excellent condition. The funds are turning up the heat as they added 65 MB to their shorts last week increasing them to 485 MB. Weather in South America will be watched closely after harvest as Brazil has produced three record crops in a row with the max being four.
Russia’s Ag Minister has pulled the rug out from under the bulls for the second time in the past couple of weeks, backpedaling on their intentions to restrict wheat exports. Restrictions are likely forthcoming, but it will be a few more weeks. Meanwhile, export inspections last week were modest at 14.4 MB. Shipments must improve significantly if USDA’s projection of 1.025 BB is to be reached. Spring wheat harvest is winding down at 87 percent complete compared to the average of 75 percent. Looking at the funds, they lightened their longs 45 MB last week to a token 20 MB.
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