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The dollar has peaked for the intermediate-term causing the bulls to celebrate the rise in grains. However, will they still be passing out the party hats after the Planting Intentions Report on March 31st? Looking past the report, the Southeast is running behind in planting meaning there will be some switching of corn acres into soybeans. Meanwhile, the USDA Drought Monitor shows that dryness is worsening in Minnesota and expanding in Nebraska. While dry conditions will facilitate early planting in the western Corn Belt, it could make for a volatile season. Export inspections were routine at 39.1 MB and below the average needed to reach USDA’s projection of 1.8 BB. The trend following funds did a 180 degree turn last week from their long position of 25 MB and are currently short 295 MB. This could lead to some fireworks heading into the report.
Soybeans have mustered a recovery recently even though exports are deteriorating. Inspections last week were the lowest seen since September at 19.0 MB. However, they are still above the average needed to reach USDA’s target of 1.790 BB. Harvest in Brazil is progressing with only a few minor glitches and is 61 percent complete. Exceptional yields are being reported. Last week, the trend following funds added 90 MB to their short position increasing it to 240 MB. While the fundamentals for soybeans are decidedly bearish because of record global stocks and the prospect for increased plantings, the market has maintained a degree of resilience.
Temperatures are warming up bringing the wheat crop out of dormancy. A few showers have occurred in the Plains, but the region remains deficient in moisture and more will be needed during the growing season. The peak in the dollar is a big welcome for exports but, so far, they have not materialized. Inspections last week were 18.7 MB and below the average needed to reach USDA’s projection of 900 MB. At the current pace, shipments are running 50 MB below their target. Last week, the trend following funds lightened their short position by 20 MB reducing it to 300 MB. Right now, the greatest hurdle facing wheat is global export competition
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