On The Money Grain Commentary 5-4-23

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Corn Outlook:

Recent cancellations of corn sales to China, and a mostly benign weather forecast through July is keeping the bears on the prowl. This is apparent from the funds holding a short position of 445 MB. The last time they held a position of this size was August 2020. Meanwhile, corn planting is progressing at a normal pace of 26 percent, which is par for the average and compares to plantings of 13 percent a year ago. North Dakota is the only state that has not yet begun. Looking at exports, they needed a boost and got one last week with inspections a marketing year high of 59.7 MB. This was well above the average of 50.4 MB that must be shipped each week to reach USDA’s target of 1.850 BB. However, maintaining this is optimistic because of Brazil’s competitiveness. Right now, the bottom line in corn is that with normal weather, ending stocks this fall could top 2.0 BB.

Bean Outlook:

Soybean planting progressed at a near record pace last week and is 19 percent done compared to 7 percent a year ago and 11 percent for the average. Meanwhile, export inspections last week were above the previous week at 14.7 MB but below the average of 15.0 MB that must be shipped on a weekly basis to reach USDA’s projection of 2.015 BB. China took 7.2 MB with shipments to them having declined 87.8 percent since early November. In the meantime, our overall shipments are down 80.1 percent during the same period. Currently, the funds are long 295 MB and have been liquidating their position since late February. Unless the weather becomes a factor, I look for this to continue.

Wheat Outlook:

Wheat futures rebounded on Wednesday from reports that two drones launched by Ukraine struck the Kremlin. If true, this could take the conflict with Russia to a higher level and threaten the grain accord. Ukraine has denied any involvement. Be advised there may be other actors involved that are pointing their finger to Ukraine. Meanwhile, the fund short position has reached 500 MB. This is their largest position since May 2019. On the other hand, commercial traders are long 90 MB. While this dwarfs the funds position, it reflects that the commercials have made sales but have not yet purchased the cash grain to cover their transactions and are having to buy futures. Frequently, this forces the funds to cover their shorts because the commercials have deep pockets. In other matters, the rating for the winter wheat crop rose 2 points last week to 28 percent in good-top excellent condition and compares to the rating of 27 percent a year ago. Exports are mostly mundane with inspections last week at 13.1 MB. This was below the average of 17.4 MB that must be shipped each week to reach USDA’s target of 775 MB.

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