On The Money Grain Commentary 3-31-16

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Corn Outlook:

The suspense is finally over. USDA projects planted corn acres for 2016 at 93.6 million, up 6 percent from a year ago. Corn stocks as of March 1st are 57 MB higher than last year at 7.807 BB. Unless mother nature intervenes during the growing season, the bulls have their work cut out for them. Exports have improved since mid January with inspections last week at 36.9 MB. However, this is still well below the average of 41.8 MB needed each week to reach USDA’s projection of 1.650 BB. At the current pace, we are on track to ship 1.550 BB. For the past couple of weeks, the funds have lightened their short futures position. Last week, they shed 190 MB reducing their shorts to 945 MB. However, they may add to it following the report. Now that planting intentions and stocks are known, the gurus will crank out their various “what if” production scenarios.

Bean Outlook:

USDA projects producers to plant 82.2 million acres of soybeans for 2016, down one percent from a year ago. While the report carries a positive tilt, stocks as of March 1st are 204 MB higher than last year at 1.531 BB. With a record crop being harvested in South America, the report does not give the bulls a lot of ammunition. Exports continue to slip with inspections last week at 20.8 MB. China took 10.7 MB or 51 percent of shipments. Since November, the pace of shipments has fallen 70 percent. The funds were active in soybeans last week as they bought 215 MB and are long 80 MB. However, to keep the funds attracted to their long position, the market will need a steady diet of bullish news.
Wheat Outlook:

The bulls relished when the USDA reduced all wheat acres 9 percent to 49.5 million. In addition, winter wheat acres were down 8 percent to 36.2 million. While this gave the bears a jolt, stocks as of March 1st rose 232 MB from a year ago to 1.372 BB. In other developments, exports are far from booming as inspections last week were a mediocre 12.0 MB. We must ship 17.0 MB each week to reach USDA’s projection of 775 MB. Last week, the funds added 65 MB to their short position increasing it to 640 MB. However, the lower than expected acreage may prompt them to lighten their position.

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