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Corn futures are seeing crosscurrents from the slowest pace of planting since 2013, strong exports, the supply disruption created by the Ukraine-Russia conflict, the dollar at its highest level since 2017, and the Federal Reserve raising interest rates .5 point to quell inflation. Last week, only 14 percent of the corn crop was planted compared to 42 percent a year ago and 33 percent for the average. Meanwhile, exports remain vigorous even with the dollar strength. Last week, inspections were a marketing year high at 66.2 MB. However, there are some cracks developing. One is that the pace of shipments to China is down 12.0 percent since late March. Second, the traditional and index funds have been scaling back their longs the past few weeks. Long story short, the market may continue higher, but the smart money is taking a few bucks off the table.
Soybean planting is running considerably behind schedule at 8 percent complete compared to 22 percent a year ago and 13 percent for the average. However, the window is longer for planting soybeans than corn. The corn and spring wheat acres that do not get planted because of wet conditions will likely go into soybeans. In other developments, exports are mostly run of the mill. Inspections last week were 22.0 MB, and just above the average of 21.1 MB needed on a weekly basis to reach USDA’s target of 2.115 BB. Unless shipments drop off sharply, their projection should be met. Of the grains, soybeans have the weakest fundamentals. For the moment, the smart money is becoming more conservative, as the traditional and index funds have been reining in their long position the past few weeks.
Wet conditions in the upper Midwest continues to hamper the planting of spring wheat as it is 19 percent done compared to 46 percent a year ago and 28 percent for the average. Meanwhile, the winter wheat crop has stabilized with a rating of 27 percent in good-to-excellent condition, unchanged from last week. While buyers of wheat are having to scramble to find new sources of supply created by the disruption in the Black Sea Region, the U.S. is not seeing any new business. However, it may improve with India halting exports. Last week, export inspections were a modest 14.1 MB and below the average of 23.9 MB that must be shipped on a weekly basis to reach USDA’s target of 785 MB. Currently, the pace is running 40 MB below their projection.
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