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The trend following funds continue to add to their short corn position even though planting progress has fallen behind. Currently, they are short a record 1.670 BB and may be painting themselves into a corner. Because of low values, producers are tight fisted in selling inventory. As a result, commercial traders are having to buy futures to secure their needs and are long 225 MB. If they persist, it could force the funds to cover their shorts. Meanwhile, planting is off to a slow start. As of last week, only 15 percent of the corn crop was planted compared to the average of 27 percent. Illinois and Minnesota are well behind at 34 percent and 22 percent below their average. In other developments, exports are picking up with inspections posting their second marketing year high in a row at 53.7 MB. The pace of shipments has been improving since mid-March.
Soybeans are like the sailor who has fallen out of grace with the sea. Prices have been on the downswing the past couple of weeks with little fresh news regarding trade talks with China. In addition, exports are slipping and have fallen nearly 50 percent since February. Inspections last week were 18.0 MB with China taking 5.0 MB. Since January, their average weekly shipment has been 11.4 MB, well below the minimum of 15.0 MB they were taking each week prior to the tariffs. While the bulls are finding little supportive news, the funds are crowding the boat with their short position of 730 MB. This is their largest position since September 2011 and suggests bearish sentiment is at an extreme. In other developments, planting is lagging at 3 percent done compared to the average of 6 percent.
It is difficult to find bullish news in wheat because of lagging exports and improving crop conditions. Last week, the winter wheat rating rose 2 points to 64 percent of the crop in good-to-excellent condition. This compares to a rating of 33 percent a year ago and the 10-year average of 47 percent. Meanwhile, spring wheat planting is running behind because of wet conditions and is 13 percent complete versus the average of 33 percent. Time is a concern which means producers may have to switch to an alternative crop. Export inspections last week were run of the mill at 23.1 MB with shipments on track for 900 MB which is short of USDA’s projection of 945 MB. Looking at the funds, they have increased their short position to 525 MB. The record is 945 MB.
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