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The trend following funds have shown little fear being short corn up to this point, but that may be changing. Last week, they added 285 MB to their short position increasing it to 930 MB, their biggest stance since December 2013. This creates a very narrow exit if the crop ratings fall decisively in the weeks ahead, or they are caught flat footed with a bullish acreage report on June 30th. Last week, the ratings deteriorated two points to 71 percent of the crop in good-to-excellent condition. This compares to a rating of 74 percent a year ago. According to Ag Watch’s yield model, the national average is 167.1 bpa versus the record of 171 bpa in 2014. In other developments, export inspections were routine at 43.5 MB and below the average needed to reach USDA’s projection of 1.825 BB. We must ship 45.2 MB each week to achieve their target.
Traders have become anxious because of the slow progress of soybean planting arising from excessive rainfall in the Midwest this spring. This precipitated prices gaining 8.0 percent in value over the past two weeks. As of last week, 90 percent of the crop had been planted, which is up only three percent from the previous week and compares to the average of 95 percent. The states that are seriously lagging are Kansas and Missouri, running 18 percent and 37 percent below their average. Although this may result in fewer planted acres from previous expectations, the bulls should not overlook the fact that South America is holding a record crop. Meanwhile, as a result of slow progress, the trend following funds trimmed 95 MB from their short position last week reducing it to 225 MB. Last week, the ratings slipped two points to 65 percent of the crop in good-to-excellent condition, and compares to 72 percent a year ago. According to Ag Watch’s yield model, the national yield is 46.4 bpa versus 47.8 bpa in 2014. In other developments, export inspections last week were routine at 6.5 MB. However, they were above the average needed to reach USDA’s projection of 1.810 BB.
A slow start in harvest, quality concerns, and strength in soybeans has underpinned wheat recently. As of last week, only 19 percent of the crop was harvested compared to 11 percent the previous week and 31 percent for the average. Kansas, Missouri, and Oklahoma are lagging the most running 25 percent, 22 percent, and 15 percent below their average. Although the slow harvest pace has propped up values, U.S wheat is the most expensive on the planet and faces intense competition from increased supplies in the Black Sea region. This is reflected in the sluggish pace of exports this season. Last week, inspections were 10.6 MB. We must ship 18.2 MB each week to achieve USDA’s target of 925 MB. In other developments, the trend following funds remain bearish and added 65 MB to their short position last week increasing it to 385 MB.
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