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The U.S. corn crop is firing on all cylinders as it has maintained a rating of 76 percent in good-to-excellent condition for four consecutive weeks. This compares to a rating of 70 percent a year ago and 61 percent for the ten-year average. According to Ag Watch’s yield model, this equates to a national yield of 173.1 bpa. Currently, the USDA is using a yield of 168.0 bpa. That will likely be bumped up in the August 12th Crop Report. Export inspections slipped to 45.0 MB last week and were below the average needed to reach USDA’s projection of 1.9 BB. Looking at the funds, they are becoming more bearish as they increased their short position 200 MB to 230 MB. The plus factor is that most of the bearish news and a record yield may be already priced into the market.
We could be looking at a record yield in soybeans as favorable growing conditions are forecast through mid-August. Last week, the crop rating rose one point to 72 percent in good-to-excellent condition. 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. While they could bump it higher in the August 12th Crop Report, the chances are that they will wait until September. Export inspections last week were 24.6 MB and above the average needed to reach USDA’s target of 1.795 BB. Right now, it will be a photo finish as to whether it will be met. Last week, the funds shed 60 MB from their long position reducing it to 570 MB. They have been cutting back on their longs for six weeks and additional liquidation may occur. This could continue to weigh on prices.
Wheat continues to follow corn and soybeans to an extent, but crop losses from flooding in Europe is offering support. One agency in Europe is cutting France’s soft wheat estimate 2.2 million tons to 28.2 million. In other developments, the U.S. wheat harvest is winding down at 89 percent complete compared to 91 percent a year ago and 86 percent for the average. Export inspections were a marketing year high last week at 24.3 MB putting shipments above the pace needed to reach USDA’s target of 925 MB. Last week, the funds increased their short position 45 MB to 710 MB, which is just shy of the record set in April of 765 MB. Although the fundamentals remain bearish, the funds are overloading the boat.
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