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The bears were scrambling early this week as rain interfering with harvest caused prices to jump. Corn harvest is already running behind schedule at 17 percent complete compared to the average of 32 percent. The delay adds more logistical problems on top of a big crop, especially if quality issues arise because of wet conditions. In other developments, the October Crop Report will be released tomorrow, which is expected to show an increase in yields and ending stocks close to 2.1 BB. Export inspections were 34.7 MB and above the average needed to reach USDA’s projection of 1.750 BB. The trend following funds are becoming more upbeat in their corn outlook as they have added 40 MB to their long position increasing it to 105 MB.
Soybeans got a quick burst of energy early this week because of harvest delays and dry conditions reported in northern Brazil. As of last week, only 20 percent of the crop had been harvested compared to the average of 35 percent. While the harvest delay is unlikely to turn the tide in soybeans, it puts the bears on notice that they may be stretching the rubber band a little too tight. This is evident from the trend following funds reducing their short position 40 MB last week to 245 MB. In other developments, export inspections were 35.8 MB and above the average needed to reach USDA’s target of 1.7 MB. China took 21.6 MB or 60 percent of shipments. The October Crop Report tomorrow is expected to show the USDA raising their yield estimate with ending stocks near 478 MB.
For the past several weeks, wheat has been mostly copying corn and soybeans, but is beginning to divorce itself from those markets. Planting is progressing slightly ahead of schedule at 56 percent complete compared to 53 percent for the average. Several producers in the Midwest inform me that they are cutting back on acres because of depressed values and lateness of the corn crop. Export inspections were 23.9 MB last week and above the average needed to reach USDA’s projection of 900 MB. However, the weekly sales report showed that we may struggle to meet their target. The trend following funds are beginning to scale back on their short position and have reduced it 20 MB to 430 MB. The October Crop Report is expected to show ending stocks of wheat at 704 MB.
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