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Since planting began this spring, traders have been of the mindset that we will produce a perfect corn crop. While much of the Corn Belt has been blessed with near ideal conditions, areas in the upper Midwest and in the east are showing stress because of too much rainfall that could lead to acreage loss. Furthermore, more rain is in the forecast from remnants of Tropical Storm Bill. Reports of nitrogen loss and flooding are becoming more numerous. This was reflected in last week’s ratings as they fell one point to 73 percent of the crop in good-to-excellent condition. According to Ag Watch’s yield model, this translates to a national yield of 167.9 bpa compared to the record of 171.0 bpa a year ago. In other developments, export inspections were 43.3 MB and below the average needed to reach USDA’s target of 1.825 BB. The trend following funds lightened their load last week reducing their short position 240 MB to 645 MB.
Soybean planting is 87 percent complete compared to 79 percent a week ago and 90 percent for the average. Meanwhile, Kansas and Missouri are lagging at 28 percent and 37 percent below their average. Because of excessive moisture in sections of the Midwest, the ratings fell two points last week to 67 percent of the crop in good-to-excellent condition. This was unexpected and sparked the Tuesday-Wednesday bounce. According to Ag Watch’s yield model, the national yield is 46.9 bpa compared to 47.8 bpa a year ago. Keep in mind that some areas may go unplanted because of wet conditions, but record global stocks continue to overhang. Export inspections last week were mostly routine at 8.2 MB, and above the average needed to reach USDA’s projection of 1.810 BB. The trend following funds shaved 80 MB from their short position last week reducing it to 320 MB. While traders are currently fixated on wet conditions, and more rain in the forecast, the acreage report on June 30th could set the tone for soybean futures the rest of the growing season.
U.S. wheat faces the hurdle of being overpriced in the global market. This was reflected recently when three tenders from Egypt and Iraq were awarded to Russia. Export inspections last week were 13.8 MB and below the average needed to reach USDA’s projection of 925 MB. We are only a couple of weeks into the marketing year and need to ship 18.1 MB each week to achieve their target. Harvest is cranking up and is 11 percent complete compared to 4 percent a week ago and 20 percent for the average. The spring wheat crop looks strong with the ratings rising one point to 70 percent in good-to-excellent condition. Last week, the trend following funds took a breather and lightened their short position 160 MB to 320 MB.
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