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The door for the harvest of the 2015 crops has essentially closed. Attention will now focus on crop conditions in South America, exports, and macroeconomic issues. For the moment, the most troubling factor for corn is lackluster exports and decline in demand. Inspections last week were a marketing year low of 11.6 MB. As a result, the USDA lowered their export estimate 50 MB to 1.8 BB in the November Supply-Demand Report. They also raised their yield forecast to 169.3 bpa with ending stocks up 199 MB to 1.760 BB. Long story short, the crop is getting bigger. In the meantime, the funds are turning more bearish as they added 25 MB to their short position last week increasing it to 150 MB. They will likely add to their position in the weeks ahead unless a crop problem develops in South America, or demand shows signs of improving.
Exports remain the bright spot for soybeans, but they are showing signs of waning. Inspections last week were a healthy 74.4 MB, but have dropped the past couple of weeks. As I have mentioned in previous comments, soybean shipments tend to peak by mid November. Meanwhile, the USDA did raise their export projection this week 40 MB to 1.715 BB. They also increased their yield estimate to 48.3 bpa causing ending stocks to rise 40 MB to 465 MB. In other news, 42 percent of Brazil’s soybean crop has been planted compared to 46 percent a year ago and 52 percent for the average. While the USDA projects their production at 100 million tons, private sources expect it to be closer to 101.2-102.8 million tons. Meanwhile, independent truckers began a strike in Brazil this week, but it is not expected to have a lasting effect. Last week, the funds turned decidedly bearish as they increased their short position 120 MB to 300 MB. This is their largest position since late September.
Wheat planting is almost done at 92 percent complete, but Texas lags at 76 percent. The ratings rose 2 points to 51 percent of the crop in good-to-excellent condition but is down from last year’s rating of 60 percent. Exports continue to be a sore spot as inspections last week were a meager 10.3 MB. As a result of slow shipments, the USDA lowered their export estimate in the supply-demand report by 50 MB to 800 MB. This caused a corresponding increase of 50 MB in ending stocks to 911 MB. This put stocks-to-usage at a record 45.1 percent. In other developments, the funds lightened their short position 50 MB last week reducing it to 330 MB. However, unless demand picks up, the chances are that they will tack on additional shorts.
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