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There was no shortage of price sensitive reports this week. On Monday, we had the weekly crop progress report, which showed the corn rating falling 3 points to 68 percent of the crop in good-to-excellent condition. According to Ag Watch’s yield model, the national average is 164.6 bpa compared to the record set a year ago of 171.0 bpa. On Tuesday, the acreage report put plantings at 88.897 million, which was below trade guesses and 2014 plantings of 90.597. Meanwhile, corn stocks came in 65 MB lower than expected at 4.447 BB. During the past two weeks the trend following funds have been covering short positions. Last week, they trimmed 145 MB from their shorts reducing them to 785 MB. Additional short covering may occur, especially with the decline in the ratings this week.
The bears were slowed by a speed bump this week. USDA’s projection of planted acres of soybeans at 85.139 million were in line with trade expectations, but stocks at 625 MB were 49 MB below estimates. This quieted the bears and encouraged the bulls because of tighter stocks. In addition, the report came on the heels of the crop ratings falling 2 points to 63 percent in good-to-excellent condition. According to Ag Watch’s yield model, the national yield is 46.0 bpa compared to 47.8 bpa a year ago. Wet conditions, in the central and eastern Corn Belt imply that they will likely deteriorate further. Meanwhile, producers in Arkansas, Kansas, and Missouri will be resurveyed with acreage estimates to be released in the August crop report. The trend following funds have been active lately, as they flipped from a short position of 225 MB to a long of 100 MB. That is a switch of 325 MB and drives home the point that one could be trampled if they stand in the way when they are heading for the exit.
The acreage and stocks reports this week does not offer the bulls much encouragement. All wheat acres at 56.079 million were higher than expected, but less than last year’s plantings of 56.822 million. However, wheat stocks of 753 MB are burdensome, and 40 MB above expectations. The market was underpinned on Tuesday from strength in corn and soybeans, but cooled off Wednesday. Harvest continues to lag at 38 percent complete compared to the average of 46 percent a year ago. Because of wet conditions, Illinois and Indiana are each running 21 percent behind their average, while Missouri trails by 19 percent. In light of the slow pace of harvest, the trend following funds added 10 MB to their short position last week increasing it to 395 MB.
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