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When I was a kid, if it was raining during school recess, we pitched pennies to the chagrin of our teacher. Currently, the grains offer about as much excitement. Unless some unforeseen event stirs the pot, it may stay that way until the Planting Intentions Report at the end of March. Benign weather in South America and lifeless corn exports has quelled traders interest. Meanwhile, inspections last week exceeded the previous week at 27.2 MB, but were below the average shipment of 40.9 MB needed to achieve USDA’s target of 1.650 BB. In other developments, the funds increased their shorts 225 MB last week to 780 MB. This was the first time in four weeks that they added to their position.
With 16 percent of Brazil’s soybean crop harvested and record production expected, finding firm reasons to be bullish is akin to wishing for the winning lottery ticket. However, there are two factors that might offer a short-term reprieve in the price decline. One is that last week’s export inspections at 64.6 MB were the best seen since late November. This led to the first uptick in the pace of shipments since they peaked in early November. However, this is not likely the beginning of a surge in exports as South American supplies will soon be at China’s doorstep. The other factor is that the funds added 225 MB to their short position last week increasing it to 625 MB. This matches the record set in January. Right now, the funds are at a fork in the road. If they decide to cover, it could trigger a modest price bounce. Meanwhile, the record position that they are holding may only be a temporary plateau in which they add to their shorts. Keep in mind that the funds are primarily technically driven. Longer-term, news will be scarce until the growing season begins.
There is not much news in wheat. Soil moisture is sufficient for current needs in the southern Plains, while cooler temperatures forecast in Ukraine and Russia do not pose a threat. Export inspections last week totaled 14.1 MB and were below the average of 15.9 MB needed to reach USDA’s target of 775 MB. There is a bright spot in that the pace of shipments improved for the first time in six weeks. In other developments, the funds added 140 MB to their short position last week increasing it to 605 MB. With domestic and world stocks-to-usage in the upper third of their twenty year range, bullish news in wheat is relatively sparse.
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