On The Money Grain Commentary 5-9-24


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Corn Outlook:


Last week’s rally in corn, caused by excessive wet conditions in the Midwest, triggered short covering by the funds that appears to have run its course this week.  Planting last week lagged at 36 percent complete compared to 42 percent a year ago and 39 percent for the average.  Nebraska was behind the most at 17 percent below their average.  In other matters, export inspections slipped from the previous week at 50.6 MB.  However, this was above the average of 47.1 MB that must be shipped weekly to meet USDA’s target of 2.1 BB.  Although the pace of shipments has eroded the past couple of weeks, it remains on track to reach their projection.  The bottom line in corn is that although planting progress has slowed, unless it continues to lag, or there is a loss in yield potential, current values may be difficult to sustain once fund short covering is finished.


Bean Outlook


Flooding in southern Brazil and slow planting progress triggered fund short covering in soybeans last week that appears to have ended this week.  Last week, twenty-five percent of the crop was planted, which was down from 30 percent a year ago.  However, this was above the average of 21 percent.  Meanwhile, exports improved slightly last week with inspections of 12.8 MB and China taking 3.0 MB.  However, this was below the average of 15.4 MB that must be shipped weekly to meet USDA’s projection of 1.7 BB.  Unless exports improve, we will be lucky to reach their target.  Since early November, overall shipments have fallen 82 percent while deliveries to China have declined 92 percent.  The bottom line in soybeans is that the unwinding of shorts by the funds has been the factor that has rallied the market.  However, if their short covering is finished, input may be lacking to prop up values.


Wheat Outlook:


Growing concerns of dryness and recent frost in Russia, the world’s largest exporter of wheat, is the factor supporting the market.  This, along with strong storms in the Plains has led to fund liquidation.  In the meantime, the crop rating for winter wheat unexpectedly improved one point last week to 50 percent in good-to-excellent condition, and remains above last year’s rating of 49 percent.  Although Russia’s exports are expected to be lowered, U.S. exports are struggling which reflects our lack of competitiveness.  Last week, inspections fell to 11.7 MB and are below the average of 18.9 MB that must be shipped weekly to meet USDA’s target of 710 MB.  Right now, it will be a photo finish as to whether their projection will be met.


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