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For most of 2020, the bears have been holding all the cards in corn. If the bulls have an ace up their sleeve, it is well hidden. Currently, the short position of the funds has grown to 1.560 BB. The record is 1.670 BB. This implies a great deal of complacency among the bears which could eventually work in the bulls’ favor. Meanwhile, above normal temperatures are forecast in the Midwest through mid-June, but showers are expected as well. Planting is essentially done at 93 percent complete with 74 percent of the crop reported in good-to-excellent condition, a 4 percent improvement from the previous week. According to Ag Watch’s yield model, this translates to a national yield of 177.8 bpa versus USDA’s estimate of 178.5 bpa. Export inspections last week were 44.4 MB with shipments barely on track to reach their target of 1.775 BB. The bottom line is we may not see the bears resolve broken until the crop begins to pollinate.
China has instructed their state-owned agencies to halt grain purchases from the U.S. This is a reaction to criticism by the Trump Administration regarding security measures taken by China against Hong Kong. However, non-stated owned companies can still make purchases. Meanwhile, in a surprise move, China bought four cargoes of soybeans this week giving the bulls encouragement. In other developments, planting last week progressed less than expected at 75 percent complete but is above the average of 68 percent. The first crop rating of the season shows 70 percent in good-to-excellent condition. Export inspections last week were 14.5 MB and must average 28.7 MB to reach USDA’s projection of 1.675 BB. Currently, we are on track for 1.587 BB. Although stocks of soybeans are shrinking, the market needs to be fed a diet of positive input for long-term sustained price gains.
Wheat could face a headwind as harvest has just begun. As of last week, it was 3 percent complete compared to 2 percent for the average. Meanwhile, supporting the market is the crop rating fell 3 points to 51 percent in good-to-excellent condition and compares to a rating of 64 percent a year ago. Export inspections were 18.3 MB with cumulative shipments for the season at 914.7 MB. USDA’s projection is 970 MB. Some sections in eastern Europe remain dry, but showers are expected later in the week.
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