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Unless a geopolitical or global economic event transpires that sends a cold chill throughout the grain trade, we are likely facing a drought of noteworthy news until the Planting Intentions Report on March 31st. In the meantime, the factor that could upset the pot is that the funds are short a record 1.2 BB of corn. This could make the bears squeamish, as any small unforeseen event could send them scrambling. Meanwhile, exports are uneventful with inspections last week at 22.8 MB. We need to ship 40.0 MB each week to reach USDA’s projection of 1.7 BB. Going forward, the debate as to whether corn or soybeans gets the lion’s share of planted acres this spring will soon heat up. My thoughts are that it will be mid February before producers make a decision.
There is not a lot of fresh news in soybeans. Conditions in northern Brazil are favorable which should benefit late filling pods. Meanwhile, warm, dry conditions are forecast in the south and in Argentina over the next several days. Harvest has begun in Mato Grossa, and is one percent done compared to 3 percent a year ago. Export inspections were uplifting last week at 51.2 MB. However, the pace has fallen 43 percent since shipments peaked in November. Look for the trend to continue. In the past, shipments have fallen 64 percent from their peak with the average being 85 percent. One factor that has supported the market recently is that the funds have started to unwind their record short position of 625 MB. Last week, they liquidated 100 MB reducing their shorts to 525 MB.
Wheat futures have consolidated recently as there is not a great deal of fresh news. No significant cold weather threats are forecast in the Plains for the next seven days. Cold weather is forecast for Ukraine and Russia, but snow cover is adequate. Export inspections last week were dismal at 12.5 MB and must average 16.3 MB each week to reach USDA’s target of 800 MB. A couple of weeks ago, the funds were sporting a record short position of 650 MB, but reduced their position 90 MB last week to 560 MB. Additional short covering and all winter wheat acres falling 7 percent from a year ago will likely underpin new crop.
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