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Corn appears to have priced in the decline in crude oil and diminished ethanol demand. Prior to the expiration of the May crude oil contract this week, prices fell to an historic low of a minus $37.63 as commercials did not want to take delivery and incur storage charges. This sent corn values to their lowest point in four years from where bargain hunting emerged, and they recovered. It has gone mostly unnoticed, but corn planting has begun and is 7 percent complete compared to the average of 9 percent. Most of the major states are behind with Missouri lagging the most at 14 percent below its average. After several weeks of good exports, inspections last week were 26.9 MB, their lowest since late January. Looking ahead, the funds are holding a sizeable short position of 930 MB going into the growing season. Right now, they seem comfortable with their shorts. However, a bottom developing in crude oil, or a weather issue emerging could make them uneasy.
Weakness in corn, meal, crude oil, and the Brazilian crop available for export are the issues that have plagued soybeans the past few weeks. However, there may be light at the end of the tunnel as China has made recent purchases, and meal should be in its final leg down in the sell-off. Signs developed this week that a bottom may have occurred. In other matters, export inspections saw an uptick to 19.8 MB last week, but the overall pace continues to decline and is down 73 percent from the peak in November. This should be no surprise as shipments are notorious for falling 80 from their peak. Looking ahead, a convincing bottom in meal or crude oil is needed to assure that this week’s low will hold.
Wheat is underpinned from production uncertainties in the Black Sea Region and declining condition of the crop in the U.S. Recently, Russia’s crop forecast was revised downward by 2.0 million tons because of dry conditions. As a result, they have announced their intentions to suspend exports by mid-May. This should swing business to the U.S. in the weeks ahead. Meanwhile, inspections last week were mediocre at 17.2 MB. Looking at the winter wheat crop, the rating fell 5 points last week to 62 percent in good-to-excellent condition.
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