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Corn futures have been supported recently from the rebound in the Shanghai Composite Index and U.S. equities. China has intervened of late by selling currency reserves in order to bolster their flailing economy. They also announced that they plan to change the method used in calculating quarterly GDP. Whenever a more desired effect is needed in a report, you either delete or massage the appropriate variable! Support has also been garnered from ideas that the USDA will lower their yield estimate from 168.8 bpa in the crop report. If there is a reduction, it may be modest, at best, as the crop rating has declined only 2 points since early August to 68 percent in good-to-excellent condition. Exports for the new marketing are off to a slow start with inspections at 35.2 MB. Last week, the trend following funds reduced their longs 15 MB to 80 MB.
Soybeans have found modest support recently from China’s intervention to support their economy, and expectations that the USDA may lower their yield estimate from 46.9 bpa in the crop report. However, the crop rating has stood at 63 percent in good-excellent condition for six consecutive weeks suggesting that a reduction may be wishful thinking on the part of the bulls. Meanwhile, exports for the new marketing season have gotten off to a meager start with inspections last week only 3.4 MB. Keep in mind, that South America has a record supply that is available for shipment. In other developments, the trend following funds added 70 MB to their short position last week increasing it to 190 MB. In May, they were short 465 MB.
Wheat has found support over the past couple of sessions from the rise in corn and soybeans. However, the market will struggle to move appreciably higher because of competitive exports from the Black Sea region. In addition, the dollar appears to be on the verge of its next leg higher. Exports remain lackluster with inspections last week at 13.6 MB. Spring wheat harvest is winding down at 94 percent done compared to 76 percent for the average. Meanwhile, winter wheat planting is just getting underway at 3 percent complete. Last week, the trend following funds became more aggressive as they sold 120 MB increasing their short wheat position to 330 MB. This is their largest position since June.
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