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After having everything thrown at it, i.e. a bearish crop report and recent breakdown in the trade talks with China, corn has taken a stand. This frequently happens when news is at its worst, and traders the most bearish. Eventually, a trade deal will be made, but probably not until late next month. However, getting 92.5 million acres of corn planted with a yield of 176.0 bpa is becoming a pipe dream. As of last week, only 30 percent of the crop had been planted compared to the average of 66 percent. Illinois and Indiana are running 71 percent and 51 percent behind their average. With the funds short a near record 1.505 BB, they are being squeezed and starting to cover. In other developments, export inspections were run of the mill at 39.3 MB and below the average of 53.6 MB needed to be shipped each week to reach USDA’s target of 2.3 BB.
While concerns are mostly with corn planting, soybeans are lagging as well with only 9 percent of the crop in the ground versus the average of 29 percent. This, along with the strength in corn, is the factor behind this week’s gains. However, the late start for soybeans is not as critical as that for corn and offers little support. In the meantime, soybeans are facing other issues, namely, anemic exports and the spread of African Swine Fever to countries other than China. Exports continue to erode with inspections last week at 18.8 MB. USDA revised their projection downward last week to 1.775 BB, but shipments are currently on track for 1.5 BB. Looking at the funds, they are short a record 840 MB. While the fundamentals are bearish, the boat is overcrowded for the moment.
The hill in wheat became steeper with USDA’s increase in global stocks to a record 293.0 million tons for 2019-20 and stocks-to-usage of 38.5 percent. In addition, the crop could not get much better with the ratings standing at 64 percent in good-to-excellent condition for three consecutive weeks. However, these factors are being offset from spring wheat planting behind at 45 percent complete compared to the average of 67 percent, quality issues beginning to surface, and the improvement in exports since early April. Last week, they were a marketing year high of 30.9 MB. Looking at the funds, they are short 575 MB which is a sizeable position, but not near the record.
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