On The Money Grain Commentary 10-2-14

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Corn Outlook:

Corn values continue to suffer from big crop woes.  Harvest is getting into full swing at 12 percent complete compared to the average of 23 percent.  It is progressing slower than normal because of late maturity and exceptional yields.  The quarterly stocks report shows corn stocks as of September 1st at 1.235 BB compared to 821 MB a year ago.  This was nearly 50 MB above trade estimates.  Export inspections last week were 23.6 MB and below the average needed to reach USDA’s projection of 1.750 BB.  They are off to a slow start for the marketing year and must pick up if their target is to be met.  Last week, the trend following funds trimmed their long corn position 10 MB to 65 MB.  News in corn will be sparse until the crop report on October 10th.  A boost in yield and production by the USDA is likely on the table.

Bean Outlook:

      A record production outlook, and expectations for increased plantings in South America continues to cause misery for soybean prices.  Harvest is gearing up and 10 percent complete compared to the average of 17 percent.  Like corn, late maturity is the reason behind the slow start.  Meanwhile, the trend following funds have added to their short position increasing it to a new record of 435 MB.  On the other hand, the commercials are holding their largest long position in eight years.  While the fundamentals are bearish, this development reveals that the funds are burning the candle at both ends.  In other developments, USDA reports soybean stocks as of September 1st nearly 40 MB below estimates at 92 MB, and compares to 141 MB a year ago.  While this is the lowest number since 1972-73, it was brushed aside as traders are more focused on a record harvest this fall.  Export inspections last week were 25.2 MB and below the average needed to reach USDA’s target of 1.7 BB.

Wheat Outlook:

Wheat futures have stabilized even though the trend following funds added 40 MB to their short position last week increasing it to 450 MB.  While it is not a record, it is a sizeable position.  Meanwhile, planting is progressing quickly at 43 percent done compared to the average of 36 percent.  The speed in planting is an indication that fewer acres may be going into the ground because of depressed values.  Wheat stocks as of September 1st are forecast at 1.914 BB compared to 1.870 BB last year.  USDA projects 2014 all wheat production at 2.035 BB, and winter wheat at 1.377 BB.  Export inspections last week were 21.0 MB and above the average needed to reach USDA’s target of 900 MB.

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