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Pass the bulls the Gas Ex, please! Since early May, they have stuffed and gorged themselves banking on La Nina to produce a weather event in June or July. The funds were aggressive during this period as their long position reached a four year high of 1.360 BB last week. However, with the crop rating standing at 75 percent in good-to-excellent condition for three consecutive weeks, it made it difficult for the bulls to justify their position. In addition, cooler temperatures along with scattered showers are forecast for the next ten days. These factors led to Tuesday’s crash. Meanwhile, you could have seen that it was coming, as the short position of commercial traders had grown to a four high of 2.7 BB. In other developments, export inspections were 48.6 MB and must average 54.8 MB each week to reach USDA’s projection of 1.825 BB.
Like corn, the position of the funds and commercial traders in soybeans has reached a four year extreme, which should put the bulls on notice. The funds are currently long 1.075 BB, while the commercials are short 1.475 BB. Be aware that the bulls have been dialing in adverse weather conditions since March. Considering the magnitude of the extreme, the meltdown that occurred in corn could happen in soybeans. Meanwhile, the ratings fell one point to 73 percent of the crop in good-to-excellent condition and compares to 65 percent a year ago. However, this set a record for last week. According to Ag Watch’s yield model, the national yield is 48.9 bpa compared to 48.0 bpa a year ago. Export inspections were better than expected at 11.5 MB, but must average 14.3 MB each week to reach USDA’s projection of 1.760 BB.
There is not a lot that can be said about wheat other than it is trying to hold its head above water until harvest passes. Last week, harvest was reported at 25 percent complete compared to 17 percent a year ago and 28 percent for the average. Meanwhile, Oklahoma and Texas are running 14 percent and 8 percent below their average. Export inspections were better than expected at 21.0 MB, but offer no bragging rights. The funds have lost interest and liquidated 30 MB from their shorts last week reducing them to 385 MB
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