On The Money Grain Commentary 8-6-15

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Corn Outlook:

Corn futures has its back against the wall from fund liquidation, stable growing conditions, and strength in the dollar.  Last week, the trend following funds sold 145 MB reducing their longs to 895 MB.  However, this is still a hefty position considering the negative fundamentals.  Last week, the crop rating for corn stood unchanged at 70 percent in good-to-excellent condition.  Meanwhile, corn in the excellent category improved one point to 18 percent, and has been advancing since early June.  According to Ag Watch’s yield model, the national yield is 166.2 bpa compared to USDA’s estimate of 166.8 bpa.  Export inspections last week were mundane at 36.2 MB, and below the average of 57.8 MB needed to reach USDA’s target of 1.850 BB.  Right now, the deck seems stacked against the bulls, but that could change with the crop report next week.

Bean Outlook:

Soybeans are meeting a headwind from concerns of the slowing economy in China and favorable growing conditions in the Midwest.  The forecast for August does not show any significant weather extremes.  This should facilitate crop development throughout much of the Midwest.  Last week, the crop rating improved one point to 63 percent in good-to-excellent condition.  According to Ag Watch’s yield model, this translates to a national yield of 45.9 bpa versus USDA’s estimate of 46.0 bpa.  In other developments, export inspections were 5.4 MB, and below the average of 7.6 MB needed each week to reach USDA’s target of 1.825 BB.  Last week, the trend following funds lightened their longs 210 MB reducing their position to 190 MB.  Next week’s crop report could be a barn burner, as it will include an acreage resurvey from four states and actual field data in USDA’s yield estimate.

Wheat Outlook:

Wheat continues to be plagued from abundant global stocks, strength in the dollar, and anemic exports.  Last week, inspections were 10.9 MB, and below the average of 19.4 MB needed to reach USDA’s projection of 950 MB.  At the current rate, shipments are on course for 700 MB.  Winter wheat harvest is essentially done at 93 percent, while spring wheat harvest is just gearing up at 8 percent complete.  Last week, the trend following funds became more active and sold 60 MB of wheat.  This brings their short position to 150 MB.  There is not a lot that can be said for the wheat market other than it will be a follower of corn and soybeans, along with outside developments.

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