On The Money Grain Commentary 9-25-14

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Corn Outlook:

Same song, different verse; grain producers will harvest a monster crop this fall.  However, talk of a bin buster crop is becoming old and no longer fresh news.  Several analysts are now ratcheting their yield estimates to 180 bpa compared to USDA’s current projection of 171.7 bpa.  While the odds favor USDA hiking yields next month, some of the private estimates may be a bit ambitious.  Meanwhile, harvest is 7 percent done, which lags the average of 15 percent.  This is mostly because of late maturity, although harvest will likely proceed at a slower pace because of higher yields.  Exports have picked up with inspections last week at 40.1 MB.  As a bit of a surprise, the trend following funds added 30 MB to their long position last week increasing it to 75 MB.  However, they have likely trimmed it back this week.

Bean Outlook:

      The whistle has been blown, but the bears keep piling on soybeans.  This is evident from the trend following funds increasing their short position to a record 420 MB.  Meanwhile, the commercials are holding their largest long position since 2006.  Right now, the rubber band is being stretched to the max.  Although the fundamentals are quite bearish, the bears should take heed as their rope is getting shorter.  This is herd mentality at its best.  In other developments, harvest is just beginning at 3 percent complete compared to 8 percent for the average.  Like corn, late maturity and higher yields are behind the slow start.  Yield reports, so far, are 60 bpa or higher, along with a few 80’s and 90’s.  USDA’s current estimate is 46.6 bpa.  Export inspections last week were decent at 17.1 MB.

Wheat Outlook:

Over the past few weeks, the bears have been chewing up and spitting out wheat.  While the seasonal tendency is for prices to move higher into October, the bulls have struggled to get a toe hold because of increased global stocks.  This can be seen from the short position of the trend following funds rising 20 MB to 410 MB.  Meanwhile, there was a bright spot earlier in the week when Egypt purchased 55,000 tons, their first purchase from the U.S. since February.  Export inspections last week were 18.6 MB and above the average needed to reach USDA’s projection of 900 MB.  In other developments planting is progressing smoothly at 25 percent complete compared to the average of 22 percent.  Spring wheat harvest is in the final stretch at 86 percent done.

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