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Judging by the increase in volatility over the past few weeks, one would think that we are in the dead heat of summer rather than the early stages of planting. Daily price fluctuations of 13 cents or more in corn have become the norm rather than the exception. Dry conditions in central Brazil have lowered expectations for their safrinha corn crop and increased the possibility of importing corn from the U.S. Exports have picked up recently with inspections last week a marketing year high of 44.7 MB. This was the fourth consecutive week that they have exceeded 40 MB. Meanwhile, corn planting is breezing along with 30 percent of the crop planted compared to the average of 16 percent. The funds were extremely active last week as the dumped 665 MB of their short position reducing it to 240 MB. It will be an interesting growing season.
Volatility in soybeans has kicked into high gear with daily price swings of 35 cents being common. The funds must have been given a shot of espresso, as they have increased their longs 230 MB to 595 MB. This is their largest position since May 2014. Wet conditions in Argentina, which has slowed harvest and lowered production estimates, has been getting a lot of publicity lately. However, conditions are forecast to improve suggesting that an abundant crop in South America is still on tap. Exports have been routine the past several weeks with inspections last week a modest 10.2 MB. Although the pace of shipments has been declining, they remain on track to reach USDA’s projection of 1.705 BB. Planting is just beginning at 3 percent complete compared to the average of 2 percent. Based upon conversations with producers, the rally in soybeans since March may result in 500,000-1.5 million acres being switched from corn. We will be kept in suspense until the final acreage report in June.
Wheat acts like it is content to sit back and watch the show in soybeans. Fundamentally, there is little to discuss. Recent showers in the Plains resulted in the ratings rising 2 points last week to 59 percent of the crop in good-to-excellent condition Spring wheat planting is running ahead of schedule at 42 percent compared to 28 percent for the average. Export inspections were mostly a non event at 14.9 MB. We have to ship 18.8 MB per week to reach USDA’s target of 775 MB. Meanwhile, the funds lightened their short position last week trimming it 90 MB to 675 MB.
July wheat posted a downside reversal at 518.5 last week that was followed by a break to 468.5 on Monday. From here, the market recovered to 497 on Thursday. Additional resistance is at 500 or 506. Meanwhile, support is at 480, 468.5 followed by 453. Like corn, a period of consolidation could unfold as there is little reason for trading past 518.5, or falling below the contract low. We may stay in a range until May 10th or May 18th and, at that time, the market may attempt to seek a new low. During May, wheat futures are down 58 percent of the time. Next week, the odds are even as to whether July wheat will be higher or lower.
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