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A week ago, the bulls were hoping that the crop report would be the impetus propelling the corn market higher. It did not happen. Going into the report, the funds had accumulated some baggage in that they had flipped from a short position of 15 MB to a long of 260 MB. Now, traders are back to the drawing board looking to exports, yield reports, and outside factors for a direction. Currently, we are six weeks into the marketing year with exports running 24 percent behind last year. Inspections last week were 22.5 MB and must average 36.9 MB each week to reach USDA’s target of 1.850 BB. Open weather has allowed harvest to accelerate, which is 42 percent done compared to 23 percent a year ago and 43 percent for the average. Over the next couple of weeks, look for corn to take its direction from soybeans and the outside markets.
Soybeans are still getting mileage from USDA’s reduction of domestic ending stocks, as well as recent sales to China. Exports have sizzled lately with inspections last week a marketing year high at 67.3 MB. However, keep in mind that they tend to peak early to mid November. Additional support has come from reports of dryness in Brazil delaying planting, and the unwinding of short positions by the funds. Last week, the trend following funds liquidated 35 MB reducing their position to 150 MB. Further liquidation may offer support a while longer. In the meantime, be advised that private sources in Brazil are projecting acres to rise 3.8 percent in 2015 suggesting that the bulls should not get the cart in front of the horse. Harvest is picking up steam and is 62 percent complete compared to 37 percent a year ago and 54 percent for the averag
Dryness in Australia and Russia, along with short covering by the funds have been the factors supporting wheat. Last week, the trend following funds shed 70 MB from their shorts reducing them to 270 MB. Meanwhile, keep in mind that the U.S. is overpriced in the global market, while production increases are expected in Australia, Canada, EU, Former Soviet Union and Ukraine. This is reflected in exports with inspections last week a mere 10.6 MB. We have to ship 16.0 MB each week to reach USDA’s target of 850 MB. After a slow start this fall, winter wheat seeding has picked up, and is 64 percent done compared to 66 percent a year ago and 66 percent for the average. Harvest is picking up steam and is 62 percent complete compared to 37 percent a year ago and 54 percent for the average.
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