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Corn futures are seeing some stability as traders have probably overplayed bearish weather. After posting a rating of 76 percent in good-to-excellent condition for four straight weeks, the rating for corn fell two points last week to 74 percent. Last year’s rating was 70 percent, while the ten-year average is 61 percent. According to Ag Watch’s yield model, this equates to a national yield of 171.6 bpa. The USDA is currently using a yield of 168.0 bpa. Traders expect that it could be bumped up to 170.8 bpa in the crop report tomorrow. Export inspections last week were 57.1 MB and below the average needed to reach USDA’s target of 1.9 BB. The funds are becoming more aggressive as they increased their short position 200 MB last week to 430 MB. Currently, the market needs a catalyst to shake them from their position.
Soybeans have turned higher as bearish weather is being trumped by increased sales to China. Export inspections last week were vigorous at 35.7 MB, the highest seen since early May. China took 15.6 MB or 43 percent of shipments. Most areas of the Midwest are seeing good weather with the crop ratings standing at 72 percent in good-to-excellent condition for two consecutive weeks. This compares to a rating of 63 percent a year ago and 59 percent for the ten-year average. According to Ag Watch’s yield model, this translates to a national yield of 49.9 bpa. Currently, the USDA is using a yield of 46.7 bpa. Traders expect that this could be increased to 47.5 bpa in the crop report. Looking at the funds, they have been trimming back their longs since mid-June. Last week, they reduced their longs 80 MB to 490 MB. Although the bulls have shown some life recently, to keep the recovery intact, the funds will have to come back to the table.
Wheat has been underpinned recently from expectations that Europe’s crop will be smaller because of flooding. Harvest of the winter wheat crop in the U.S. is done with the spring crop 30 percent complete. This is ahead of last year’s pace of 22 percent and 18 percent for the average. Exports have gotten off to a solid start this season, but inspections were slow last week at 13.8 MB. USDA projects exports at 925 MB, but if the current pace continues, they could be increased 25 MB. Looking at the funds, they are short 705 MB, which is shy of the record of 765 MB. If the fundamentals turn slightly more positive, it could induce them to cover.
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