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Trade negotiations with China is losing some of its prominence as the lead story in ag circles with weather and planting now becoming the top issue. Major flooding in the upper and western sections of the Midwest means delays in fieldwork and a late start in corn planting. This could result in a greater switch to soybeans. The problem could be exacerbated as the long-term forecast is for above normal rainfall in April. Be aware that the funds are short 1.310 BB of corn, their largest position since 2017. When they covered, prices rose 19 percent in value. While there is no guarantee it will happen this time, the fuel is there. All that is needed is a match. Looking at exports, inspections were above the previous week at 39.2 MB, but below the average needed to reach USDA’s projection of 2.375 BB.
When one reads the tea leaves, they foretell of more soybean acres being planted if the long-range forecast for above normal moisture comes to fruition. This, along with reduced exports, could push ending stocks this fall close to 1.0 BB. While traders have not given up on getting a trade agreement inked with China, it has taken longer than many had anticipated. As mentioned in previous comments, there are a lot of moving parts involved that are not ag related. Looking at exports, inspections were 31.5 MB and below the average needed to achieve USDA’s target of 1.875 BB. The pace of shipments has declined for the past 4 weeks. Looking at the funds, they covered 150 MB last week reducing them to 435 MB. This is a bit odd as there was a slight increase in their short corn position.
Flooding in the upper and western sections of the Midwest is supporting wheat. A heavy snowpack in the Dakotas will lead to flooding along the Red River causing a delay in spring wheat planting. Meanwhile, exports continue to struggle with inspections at 12.5 MB. Currently, they are on track for 832 MB versus USDA’s projection of 965 MB. One bright spot is that Egypt purchased 120,000 tons of U.S. wheat this week. Currently, the funds are presently short 535 MB which is a hefty load considering the problematic moisture issues in the Midwest.
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