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The bin door on this year’s corn crop has been shut leaving traders to sift for fresh fundamental input. Unfortunately, this week, the focus and concerns have been on the terrorist attack in Paris. However, in the days ahead, attention will return to planting prospects for 2016, weather in South America, and exports. Right now, exports are bothersome. Inspections last week were 14.7 MB, well below the pace of 38.2 MB needed each week to reach USDA’s projection of 1.8 BB. We are nearly 3 months into the marketing year, and if the pace continues, shipments may not even top 900 MB. The funds were active last week as they sold 380 MB increasing their short position to 530 MB. Unless weather in South America becomes an issue, which is not the case now, or there is a surge in exports, they are likely to add to their position.
Strong soybean exports continue to be the talk of the town with inspections last week 79.4 MB. While they exceeded the previous week, the pace of shipments declined for the first time since the marketing season began. As mentioned in earlier comments, soybean shipments tend to peak by mid November. If they have indeed maxed out, history shows that inspections decline on average 85 percent by the time the marketing season ends with the range being from 64-96 percent. This suggests that shipments could eventually drop off to 13.0 MB or less later next year. Weather in South America is considered mostly favorable, although there are a few spots in central and western Brazil that could use a shower. Brazil is 60 percent planted, which is 11 percent behind their average. Last week, the funds were active as they sold 145 MB increasing their short position to 395 MB. This is their largest position since last May and suggests that a bout of short covering could occur. However, unless South American weather becomes a factor, the market will likely stay on a downward slope.
Wheat planting is near completion at 94 percent, although Texas is straggling at 82 percent done. Last week, the crop rating improved one point to 52 percent in good-to-excellent condition. This compares to the rating of 60 percent a year ago. The strong dollar is killing U.S. exports as inspections last week were 10.7 MB. We have to ship 15.4 MB each week to reach USDA’s target of 800 MB. At the current pace, shipments are on track for 635 MB. The funds were mostly idle last week, but did reduce their short position 5 MB to 325 MB. With domestic stocks-to-usage at a record 45.1 percent, and world stocks-to-usage in the mid third of their twenty-year range, prices will have a difficult time sustaining meaningful gains.
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