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The door is quickly closing on corn harvest for 2015. As of last week, it was 85 percent complete. Attention is already turning to weather in South America, exports, and the crop report due on November 10th. Right now, the biggest factor facing corn is the lousy pace of exports. While inspections at 18.7 MB last week were an improvement from the previous week, we have to ship 38.2 MB on a weekly basis to reach USDA’s target of 1.850 BB. As it stands now, there is plenty of room for the USDA to trim their export projection next week. In other developments, the funds were mostly inactive last week, but did reduce their short position 10 MB to 125 MB. However, unless a crop issue arises in South America, or exports pick up considerably, they will likely add to it in the weeks ahead.
Soybean harvest is wrapping up at 92 percent done with double crop winding down in another week. The story in soybeans over the past several weeks has been the torrid pace of exports. Inspections last week were a phenomenal 94.0 MB. Currently, they are running 9 percent ahead of a year ago. However, do not expect their blaze to continue as shipments tend to drop off by mid November. In other news, weather is improving in Brazil. A few weeks ago, traders were concerned about dryness, but rainfall is returning to normal. Because of the improvement, planting has picked up and is 31 percent complete compared to 29 percent a year ago, but lags the five year average of 42 percent. Estimates are that they could produce a 100 million ton crop. Last week, the funds were more active as they increased their short position 75 MB to 130 MB. In the weeks ahead, traders will focus on weather in South America, signs that exports are peaking, and economic news out of China.
Dry conditions in the Plains are dissipating because of recent rainfall. However, concerns remain the Black Sea Region. Last week, the rating for wheat rose 2 points to 49 percent of the crop in good-to-excellent condition. Winter wheat planting is 88 percent complete, slightly trailing last year’s pace of 89 percent and the average of 90 percent. Currently, the headwind facing wheat is mediocre exports because of the strong dollar. Inspections last week were a marketing year low of 6.2 MB. We must ship 16.7 MB each week to reach USDA’s target of 850 MB. Look for their projection to be trimmed in next week’s crop report. Support recently has come from the funds liquidating their shorts. Last week, they lightened their position 105 MB reducing it to 380 MB. Additional short covering underpinned the market this week.
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