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Are the bears becoming overconfident in thinking that no crop issues will develop this season? As of last week, the trend following funds were short 525 MB of corn, their largest position since January 2014. Although planting began on a slow note this month, considerable progress was made in the western Corn Belt last week putting the crop at 19 percent planted compared to the average of 25 percent. However, the east and south are still behind. Tennessee, Kentucky, Missouri and Indiana are running 43 percent, 38 percent, 24 percent and 23 percent below their average. The crop in these states will be pollinating in the dead heat of summer. This suggests that it may be premature to assume Mother Nature will give us a free pass for the growing season. In other developments, export inspections were a marketing year high of 50.9 MB. During the past three weeks, the pace of shipments has improved 20 percent.
Soybeans have been resilient the past few weeks in lieu of expectations for record global stocks and increased plantings for 2015. This largely stems from a weaker dollar and the absence of sales cancelations by China. Last week, the trend following funds bought 135 MB reducing their short position to 245 MB. The first planting report of the season shows 2 percent of the crop planted compared to 3 percent a year ago and 4 percent for the average. Weather this week should allow for progress to improve. Export inspections were up from the previous week at 11.4 MB with China taking only a token shipment. Meanwhile, exports remain on track to reach USDA’s projection of 1.790 BB. Harvest in Brazil is virtually done at 91 percent complete.
Wheat futures fell to a new low this week from the forecast for showers in the southern Plains and improving conditions in the Black Sea region. Currently, forty-two percent of the wheat crop is in good-to-excellent condition, unchanged from the past two weeks. Spring wheat planting is progressing rapidly at 55 percent complete compared to 17 percent a year ago and 29 percent for the average. Export inspections were down from the previous week at 19.9 MB and below the average needed to reach USDA’s projection of 880 MB. In other developments, the funds have increased their short position 15 MB to 480 MB. This is their largest position held since January 2014, and may warrant a bounce.
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