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Corn futures have been rising on friendly exports and the bulls positioning for any signs of adverse weather this season. Currently, the NOAA weather forecast for June shows mostly normal precipitation in the western Corn Belt, but below normal in portions of the east. Meanwhile, the bulls are betting that a decline in Brazilian corn exports because of drought could swing additional business to the U.S. The first crop rating for 2016 puts 72 percent of the crop in good-to-excellent condition compared to 74 percent last year. Ag Watch’s yield model shows the national yield at 166.8 bpa versus 168.4 a year ago. In other developments, export inspections sank to 30.9 MB last week, their lowest since the end of March. Last week, the funds were aggressive as they added 255 MB to their longs increasing them to 370 MB. They have ample room to add to their position, but positive input is needed to keep their interest lit.
Soybean futures remain underpinned from an expected shortfall in South America’s production and the bulls banking on adverse weather during the growing season. The latest NOAA June forecast shows normal moisture in the west, but below average in portions of the east. Planting is progressing at a speedy pace and is 73 percent complete compared to 68 percent a year ago and 66 percent for the average. While most of the major producing states are on par or ahead of their average, Kansas is running 27 percent behind. Export inspections were routine at 6.6 MB and below the average needed to reach USDA’s projection of 1.740 BB. Last week, the funds lightened their long position to 990 MB, but commercial traders increased their shorts to 1.375 BB. This is the greatest extreme seen in their position since 2012. When that occurred, there was a precipitous drop in values once the commercials acquired their needs.
Bounces in wheat are likely to be short lived as harvest is just around the corner. Right now, wheat is following corn and soybeans. The crop rating improved one notch last week to 63 percent in good-to-excellent condition. This compares to a rating of 44 percent a year ago. Export inspections were better than expected at 18.1 MB with cumulative shipments running at 737 MB. USDA’s projection is 780 MB. The funds were slightly more aggressive last week increasing their short position 20 MB to 590 MB. As it stands now, there is probably little chance for a meaningful recovery until we get through harvest.
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