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Corn futures have found some inspiration lately as the playing field is overpopulated by the bears. As of last week, the short position of the funds had risen to a record 1.325 BB. This seems a bit excessive since planting and the growing season is just ahead. Although the bulls are chomping at the bit that La Nina could produce a summer drought, it is premature to assume that it will happen. In addition, demand is nothing to celebrate. Export inspections last week were lethargic at 31.6 MB. Although the pace has improved slightly over the past eight weeks, we must ship 41.6 MB each week to reach USDA’s target of 1.650 BB. Not once has this level been achieved this season. At the current pace, exports could be lowered 100 MB, which would put ending stocks at 1.900-1.950 BB. That being said, the bulls may not want to don their party hats just yet.
Fresh news in soybeans is mostly scarce. Brazil’s harvest is progressing at 52 percent complete versus 50 percent a year ago. CONAB recently increased their production estimate to 101.2 million tons. This compares to USDA’s forecast of 100.0 million tons. Export inspections slid last week to 26.2 MB, their lowest since September. China took 16.1 MB or 61 percent of shipments. Since peaking in November, the pace has fallen 55 percent. If the norm is followed, weekly shipments could eventually slide to 13.0 MB. In other developments, the funds were active last week reducing their short position 235 MB to 440 MB. Their liquidation has been the primary factor supporting the market. Volatility will likely remain subdued until we get closer to the Planting Intentions Report on March 31st.
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