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Corn gathered support early this week from cool, wet conditions in the Midwest. However, prices met a headwind Thursday from anxiety that the Fed may raise interest rates in June. Export inspections last week were 43.7 MB and have been above the 40.0 MB mark for seven consecutive weeks. They must average 45.5 MB each week to reach USDA’s target of 1.725 BB. As it stands now, it will be a photo finish as to whether their projection is met. Planting is 75 percent complete compared to 82 percent a year ago and 70 percent for the average. Minnesota and Wisconsin are making great strides running 29 percent above their average, while Ohio is lagging at 20 percent below its norm. Recently, the funds shed 215 MB from their long position reducing it to 75 MB. The reduction in their position could be a positive for the bulls later.
Soybeans met resistance midweek from fear of a rate increase by the Fed. Last week, the funds juiced up their long position 185 MB to 975 MB. This is 50 MB short of the record of 1.125 BB set in May 2012. Combined, the trend following and index funds are sporting a massive long position of 1.7 BB. When a position of this magnitude has occurred in the past and the music stopped, it has taken 8 months for prices to hit rock bottom with them falling anywhere from 24 to 41 percent. This implies that without a legitimate threat to production this season, new crop soybeans could be an $8.00 item at harvest. In other developments, planting is 36 percent done compared to 41 percent a year ago and 32 percent for the average. Minnesota is making great strides running 31 percent ahead of their average; whereas, Ohio is lagging at 18 percent below the norm. There is not much to say about exports as inspections last week were routine at 7.1 MB. China was a no show. We must ship 10.3 MB each week to reach USDA’s projection of 1.740 BB.
There is not a great deal to say about wheat, other than it is keeping one eye on corn and the other on soybeans. Last week, the crop rating stood unchanged at 62 percent in good-to-excellent condition. This compares to a rating of 45 percent a year ago. Export inspections last week were mediocre at 13.5 MB. Cumulative shipments for the season are 708 MB compared to USDA’s target of 780 MB. The funds have turned a little more bearish as they increased their short position 50 MB to 585 MB. Currently, the biggest drag on wheat is that world supplies are at a record level.
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