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It is amazing as to how quick the mindset in the grains can change. A couple of weeks ago, the bears were crawling out of the woodwork from USDA’s projection of a 15.0 BB corn crop. Today, the trade talk is, will the crop get planted? As of last week, only 49 percent of the crop was in the ground compared to the average of 80 percent. With wet conditions forecast through early June, progress will remain slow. In the meantime, only 19 percent of the crop has emerged which is 30 percent below the average. This brings into question whether a trendline yield is even attainable. Although the funds have begun to unwind their short position, it still stands at 1.460 BB meaning more short covering is likely. In other news, export inspections were modest last week at 32.3 MB and below the average needed to reach USDA’s projection of 2.3 BB.
While the pace of soybean planting continues to lag, it is not as great of a concern as corn. Last week, only 19 percent of the crop was planted versus the average of 47 percent. Because of the delay in corn planting, more acres are likely to be switched to soybeans. Meanwhile, producers have some decision to make as to whether to file for preventative plant insurance with their corn acres or take the Trump aid package that offers $2.00 for soybeans, 60 cents for wheat, and 4 cents for corn. On the surface, the Trump package favors more soybeans. Looking at exports, inspections last week were mediocre at 18.2 MB. If the pace of shipments does not pick up, USDA’s export target could slip to 1.5 BB, down from their current estimate of 1.775 BB. Right now, the most supportive factor for soybeans is that the funds are short a record 885 MB. If the funds cover positions in corn and wheat, they could reduce their holdings in soybeans as well.
Wheat has held up remarkably well even though the crop rating improved 2 points last week to 66 percent in good-to-excellent condition. This is above the 10-year average of 46 percent. The gains in corn and fund liquidation have been supportive. Last week, the funds trimmed 25 MB from their shorts reducing them to 555 MB. This was their second week of liquidation. In other developments, spring wheat planting is 70 percent done compared to the average of 80 percent. Export inspections remain sluggish at 27.8 MB. However, the pace has picked up since last month.
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