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Corn was trounced this week after the recent cold snap failed to muster bullish interest. It seems that the market is more concerned with expectations that the Fed will raise interest rates one-quarter point in next month’s meeting, lackluster exports, cancellation of sales by China, and a quick start to planting. As of last week, 14 percent of the crop was planted compared to 7 percent a year ago and 11 percent for the average. Looking at exports, they could use a boost as inspections last week were 35.9 MB and must average 51.0 MB on a weekly basis to reach USDA’s target of 1.850 BB. Although the pace of shipments has improved since mid-February, it is running 215 MB short of the level needed. The bottom line in corn is that it faces an uphill challenge unless weather becomes a factor during the growing season.
Soybeans have been under the gun as Brazil is wrapping up a record harvest that may offset losses in Argentina. Also, planting is off to a fast start at 9 percent complete compared to 3 percent a year ago and 4 percent for the average. Meanwhile, exports are nothing to get excited about as inspections last week were 13.7 MB, the smallest since the third week of September. China took 4.7 MB which was the lowest shipment to them since early October. Currently, the funds are long 555 MB and liquidating which could pressure the market even more.
The recent cold snap likely damaged some of the winter wheat crop, but it did not sway the funds to abandon their shorts. This is likely because of the recent moisture received in the southern Plains, and expectations for a record crop and exports from Russia. Meanwhile, the winter wheat crop continues to deteriorate as it fell one-point last week to 26 percent in good-to-excellent condition. This compares to last year’s rating of 27 percent and the 10-year average of 45 percent. Looking at exports, inspections last week were 13.3 MB and must average 16.9 MB on a weekly basis to reach USDA’s projection of 775 MB. Currently, they are running about 50 MB below the pace needed to achieve their target.
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