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More woes in China. Their purchasing manager index has fallen to a six year low suggesting that their economy is contracting. This muddies the water regarding their imports of U.S. and other global products. Corn harvest is beginning in the southern periphery of the Midwest with 180 bpa yields being reported. Last week, the ratings fell one point to 68 percent of the crop in good-to-excellent condition. According to Ag Watch’s yield model, the national yield is 166.2 bpa compared to USDA’s estimate of 168.8 bpa. Export inspections last week were 39.3 MB with cumulative shipments standing at 1.760 BB. With only a few days left in the marketing year, reaching USDA’s projection of 1.850 BB seems like a stretch. The trend following funds are mostly inactive, although they added 15 MB to their longs last week increasing them to 95 MB.
Dryness and above normal temperatures in the eastern Corn Belt are being overshadowed by the slowdown in China’s economy. In addition, South America has a record supply of soybeans lurking to flood the market. Meanwhile, the crop ratings are stable as we have maintained a rating of 63 percent in good-to-excellent condition for five consecutive weeks. According to Ag Watch’s yield model, the national yield is 45.5 bpa compared to USDA’s estimate of 46.9 bpa. In other developments, export inspections last week were 6.7 MB. Cumulative shipments are 1.829 BB, just shy of USDA’s target of 1.850 BB. The trend following funds are turning bearish as they have gone from a flat position to one of being short 120 MB. Over the next few weeks, traders will monitor developments in China and exports for the 2015-16 season. As of now, new crop sales are running below the level needed to reach USDA’s projection of 1.725 BB.
Wheat continues to bump heads with strength in the dollar and competition in the world market with the Black Sea region. Meanwhile, export inspections were better than expected last week at 22.1 MB, and above the average needed to reach USDA’s target of 925 MB. However, this was only the second time this marketing year that they have exceeded the required level. As it stands now, shipments are on track to run 90 MB short of their target. In other developments, spring wheat harvest is humming along at 88 percent complete compared to 75 percent a week ago and 62 percent for the average. The trend following funds are turning more bearish as they increased their short position 25 MB to 210 MB.
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