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Corn continues to meet headwinds from mediocre exports and expectations for an increase in planted acres this spring. Because of reduced fertilizer and energy costs, the gurus are looking for producers to plant 1-2 million more acres than a year ago. With corn prices currently below the cost of production, this may be the year to raise the crop on paper rather than putting it in the ground. Export inspections last week were dismal at 29.0 MB and below the average of 41.1 MB needed to reach USDA’s projection of 1.650 BB. The largest weekly inspection this season has only been 35.4 MB. At the current pace, USDA could trim 150-200 MB from their forecast. In other developments, the funds have lightened their short position 30 MB to 915 MB.
Soybeans continue to meet resistance from expectations of a record harvest in South America. This weighed on export inspections last week as they slid to 38.5 MB. The decline reflects the vessel line up and availability of the crop in Brazil. This was the smallest weekly inspection since last September. China took 23.9 MB or 62 percent of shipments. Last week, the funds lightened their short position 90 MB reducing it to 410 MB. Right now, there is a dearth of fresh news in soybeans with traders mostly biding their time until the growing season begins.
The only fresh development in wheat is that the funds have increased their short position to a record 685 MB. With the winter wheat crop on the verge of coming out of dormancy, it leaves the market vulnerable to a bout of short covering in the event of a late freeze. Meanwhile, exports continue to languish with inspections last week at 13.6 MB. We need to ship 16.5 MB each week to reach USDA’s target of 775 MB. At the current pace, shipments are running 50 MB short of their projection.
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