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The bulls have finally thrown in the towel for a weather event unfolding in corn this season. This was reflected last week by the funds selling 100 MB flipping to a short position of 30 MB. The crop rating remains strong maintaining a rating of 76 percent in good-to-excellent condition for the third consecutive week. This compares to a rating of 70 percent a year ago and 62 percent for the ten-year average. According to Ag Watch’s yield model, this equates to a national yield of 173.1 bpa. So much for the highly publicized La Nina event that was supposed to wreak devastation in the corn crop this year. In other developments, export inspections last week were 51.4 MB and below the average needed to reach USDA’s projection of 1.9 BB. At the current pace, they could fall 100 MB short of their target.
While weather could still be a factor in soybeans, the window is closing. The forecast for August does not look very threatening as the NWS projects normal to above normal temperatures accompanied with normal to above normal moisture. This will have the tendency to produce a greenhouse effect. Last week, the crop rating for soybeans stood at 71 percent in good-to-excellent condition for the third straight week. This compares to a rating of 62 percent a year ago and 60 percent for the ten-year average. According to Ag Watch’s yield model, this translates to a national yield of 49.9 bpa. Meanwhile, the funds are exiting the market as they sold 95 MB last week reducing their long position to 630 MB. In June, their longs stood at 1.075 BB. Further liquidation may be forthcoming. Looking at exports, inspections improved last week to 25.1 MB. We have to ship 21.3 MB each week to reach USDA’s target of 1.795 BB.
Wheat is the ugly girl at the dance, but she may be getting a makeover. France has seen excessive rainfall this spring, which has led to flooding that will curtail production. Guesses are that the EU’s crop will be reduced 8-10 million tons. While not a game changer, it is a step in the right direction as the funds are heavily short. Currently, they are short 665 MB meaning that the bears are overcrowding the boat. In other developments, harvest is 83 percent complete compared to 82 percent a year ago and 79 percent for the average. Export inspections were exceptional at 20.2 MB and above the average needed to reach USDA’s projection of 925 MB.
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