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Wheels on the planters are slow to turn. As of last week, 3 percent of the corn crop had been planted compared to 5 percent for the average. This was only a 1 percent increase from the previous week. Kansas and Missouri are trailing 8 and 9 percent behind their average. Looking at the forecast through early May, progress will remain slow. However, the trade has the mindset that the crop will get planted and is mostly preoccupied with supply. This is evident from the funds increasing their short position to a record 1.475 BB. Meanwhile, the index funds have their smallest long position since 2009. This could create a firestorm if Mother Nature backs the funds into a corner causing them to cover. In other developments, export inspections last week were 46.5 MB and are on track for shipments of 2.137 BB compared to USDA’s projection of 2.3 BB. However, the pace has picked up the past 4 weeks.
Optimism over signing a trade agreement with China continues to run between hot and cold. This week it was cold. Soybeans have been under pressure from a story that a trade resolution with China might not occur until June. As mentioned in previous comments, this is a complex process in that there are a lot of issues to be resolved. Even with a new agreement, it is doubtful that we go back to the levels of shipping 15-30 MB each week prior to the tariffs. This is evident from export inspections last week being a marketing year low of 16.9 MB. Currently, shipments for the season are on track for 1.665 BB versus USDA’s target of 1.875 BB. China took a modest 4.7 MB. Over the past 14 weeks, their average shipment has been 12.5 MB. Looking at the funds, they are short 425 MB which is a modest position. With U.S. and global stocks at a record level, it will probably take a weather event to entice them to cover.
Wheat was pressured this week from the ratings showing 60 percent of the crop in good-to-excellent condition for the second week in a row. This compares to a rating of 31 percent a year ago and 46 percent for the 10-year average. Other issues weighing on wheat are an increase in Russia’s production, and anemic exports. Inspections last week were modest at 18.7 MB and below the average of 30.4 MB needed each week to reach USDA’s target of 945 MB. Currently, shipments are on track for reaching 848 MB. Because of inclement weather, spring wheat planting is off to a slow start at 2 percent complete compared to the average of 13 percent. However, this has not offered much support. Looking at the funds, they are short 430 MB, and have been gradually reducing their position since it peaked 5 weeks ago at 545 MB
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