On The Money Grain Commentary 3-19-15

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Corn Outlook:

Corn futures have fallen to their lowest point since late January, as the trend following funds abandon their long position.  Last week, they dumped 105 MB reducing their longs to 25 MB.  Weakness came from the sell-off in crude oil and strong dollar.  Be aware that the liquidation by the funds could become a bullish catalyst if planted acres in the report on March 31st are at the low end of expectations.  Meanwhile, some analysts are of the opinion that acres may only vary slightly from USDA’s estimate in February of 89.0 million, down 1.6 million from a year ago.  A lot is riding on the report, which stands the chance of setting the price tone during the growing season unless Mother Nature goes ballistic.  In other developments, export inspections were their lowest in four weeks at 28.9 MB.  We need to ship 41.3 MB each week to reach USDA’s target of 1.8 BB.

Bean Outlook:

The Brazilian truckers strike may be riding into the sunset unless the meetings with the Brazilian government do not go well next week.  Looking ahead at the Planting Intentions Report, most traders expect an increase of 4-6 million acres from a year ago.  However, wet conditions in the Southeast and southern periphery of the Corn Belt will likely cause a few more acres of corn to be switched into soybeans.  The week after next will tell the tale.  Export inspections were down for the sixth consecutive week at 21.4 MB.  However, the pace of shipments remains above the pace needed to reach USDA’s projection of 1.790 BB.  China took 9.3 MB or 43 percent of shipments.  After reducing their short position to 45 MB a couple of weeks ago, the trend following funds sold 105 MB last week increasing their shorts to 150 MB.  If plantings are near the high end of guesses in the report, there is room for it to grow.

 Wheat Outlook:

Warm conditions in the Plains have propped up wheat recently.  The crop will be coming out of dormancy soon and needs moisture for growth.  Looking at the USDA Drought Monitor, one finds that Kansas, Oklahoma and Texas are abnormally dry.  The drop in the dollar this week may offer additional support.  As I have mentioned in previous comments, the greenback is due for a pullback that could last several weeks.  Longer-term, it is likely headed higher.  In other developments, export inspections were better than expected at 19.0 MB.  Meanwhile, we need to ship 21.9 MB each week to reach USDA’s target of 900 MB.  Last week, the trend following funds increased their short position 70 MB to 320 MB, their largest position since October.

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