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Corn is in a lockdown and will not be freed until the USDA acreage resurvey on August 12th. Until then, questions surrounding unplanted acres continues to leave the market in the dark. During the next few weeks, traders will focus on weather, the crop ratings, and exports for every available clue. In the meantime, the crop rating improved one-point last week to 58 percent in good-to-excellent condition. According to Ag Watch’s yield model, this translates to a national yield of 164.6 bpa compared to USDA’s current forecast of 166.0 bpa. Looking at exports, inspections last week were shabby at 26.6 MB with the pace of shipments well below the average needed to reach USDA’s projection of 2.1 BB. Currently, the funds are long 655 MB and may add to their position going into August.
USDA’s acreage estimate of 80.0 million acres compared to 84.6 million in June and 89.2 million a year ago is being disputed because of the longer window to plant soybeans. While estimates from private sources are surfacing, we will remain in the dark until the August resurvey. Meanwhile, the crop rating improved one-point last week to 54 percent in good-to-excellent condition. According to Ag Watch’s yield model, this translates to a national yield of 48.1 bpa compared to USDA’s estimate of 48.5 bpa. Exports improved marginally last week with inspections of 31.9 MB. However, we are short of the pace needed to reach USDA’s target of 1.7 BB. Looking at the funds, they remain bearish and are holding a modest short position of 310 MB.
While the fundamentals of wheat are improving, they have a long way to go. Export inspections were a marketing year low last week at 11.5 MB and must average 18.3 MB to reach USDA’s projection of 950 MB. It is early in the marketing year, but the pace is running short of their target. Meanwhile, harvest is plodding along at 57 percent done compared to the average of 71 percent. The rating for spring wheat fell 2 points to 76 percent of the crop in good-to-excellent condition. Looking at the funds, they are short a modest 100 MB. Until the fundamentals of wheat improve, it will follow corn for a direction.
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