On The Money Grain Commentary 2-19-15

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Corn Outlook:

News in corn is mostly nonexistent with the market following macroeconomic events and fluctuations in the dollar and crude oil.  Trading will be primarily technical until we get closer to planting and weather becomes a bigger factor.  Keep your eye on the Dakotas, Minnesota, Kansas and southwestern Nebraska, as they are below normal in moisture.  In other developments, export inspections were 28.5 MB and below the average needed to reach USDA’s projection of 1.750 BB.  The trend following funds continue to lighten their longs as they reduced their position 20 MB last week to 320 MB.  This is down from the peak in December of 965 MB.  Traders will focus on USDA’s Ag Outlook Forum today and tomorrow for preliminary acreage and yield estimates.

Bean Outlook:

South America is in the process of harvesting a record soybean crop, but the market is underpinned from strong demand.  Exports have been declining since November, but the pace remains above the level needed to reach USDA’s projection of 1.790 BB.  Inspections last week were healthy at 49.0 MB with China taking 23.2 MB or 47 percent of shipments.  We only have to ship 11.0 MB each week in order to reach USDA’s target.  In other developments, the trend following funds are becoming more bearish as they increased their short position 100 MB last week to 390 MB.  This is their largest position since last May.  If usage remains strong, it could put them in a squeeze.

Wheat Outlook:

Wheat exports are lousy, but the lack of a weather premium is keeping the market above water.  Increased tensions in Ukraine are also supportive.  As mentioned in the corn comments, Kansas and southwestern Nebraska are lacking sufficient moisture.  Meanwhile, in the Midwest, Kentucky is running a deficit.  A quick warm up in March would stress the crop, in addition to leaving it susceptible to a late frost.  Exports continue to wither with inspections last week at 14.7 MB.  We need to ship 20.9 MB each week to reach USDA’s projection of 900 MB.  Last week, the trend following funds reduced their short position 10 MB to 265 MB.

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