On The Money Grain Commentary

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Corn Outlook:

Corn futures recovered Monday and early Tuesday ahead of the Farm Service Agency (FSA) acreage estimate.  FSA raised planted acres 1.5 million to 84.8 million, which was less than expected.  However, they will likely not have the final data until December.  Meanwhile, the crop ratings remain strong at 74 percent in good-to-excellent condition increasing the chance that the USDA likely ratchet their yield estimate higher in October from 171.7 bpa.  Harvest has commenced and is 4 percent done running behind the average of 9 percent.  Export inspections last week were 29.1 MB with the USDA projecting shipments of 1.750 BB for the 2014-15 marketing year.  Currently, the trend following funds have a token long position of 45 MB.  Look for the market to take its cue from early harvest yield reports.  So far, they are impressive.

Bean Outlook:

      Soybeans mustered a dead cat bounce Monday-Tuesday prior to the FSA acreage report.  FSA raised planted acres 1.6 million to 80.8 million.  Prices backed off after the release.  Meanwhile, the crop ratings remain strong at 72 percent in good-to-excellent condition.  Normally, they slip at this time of the season.  This increases the chance that USDA will raise them in October from their current estimate of 46.6 bpa.  Currently, the market remains entrenched in a steep downtrend from expectations of a record crop and forecasts for an increase in South America’s production in 2014-15.  Meanwhile, because of wet weather in Brazil, a late start in planting is expected.  Export inspections last week were 9.3 MB which China taking 3.9 MB or 42 percent of shipments.  USDA’s projection for shipments in the new marketing year is 1.7 BB.  In other developments, the short position of the trend following funds has risen to a record 410 MB, while the commercials are holding their greatest long position since 2006.  While the fundamentals may be overwhelmingly bearish, be aware that the bears are becoming more numerous than those on the welfare roll.

Wheat Outlook:

Increasing global stocks continues to weigh on wheat.  The September Crop Report had USDA raising them 3.7 million tons, along with at 4.0 million ton increase in the Black Sea region.  The increase of stocks, especially in Russia and Ukraine, will offer intense competition with the U.S. for exports.  Meanwhile, inspections last week were 20.0 MB and above the average needed to reach USDA’s projection of 900 MB.  In other developments, planting has begun and is 12 percent complete compared to the average of 11 percent.  Spring wheat harvest is in the final stretch and 74 done lagging the average of 86 percent.  The trend following funds are becoming more bearish and have increased their short position 45 MB to 390 MB.

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