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Today's export sales report drove the grain markets into the green to start the week off, although closing off their highs. Wheat failed to close above the 6.00 mark as it faces this psychological resistance once again. Corn bounced off a new contract low today, but closed as a gain for the first time this month.
Although exports kicked things off today, bargain buying kept the rally afloat... Corn and beans are both currently the second largest short only behind their position in 2019. In terms of the fund market, it is rare to see speculators sitting this short, especially this time of year, has many analysts and traders anticipating a short covering rally—though questions over what the catalyst will be to initiate buying remain.
South American Rains capped today's rally. We have been hearing lots about SA crops due to this year’s volatile weather, but it only truly matters to the U.S. futures market if it impacts U.S. supplies. That means that we need to see evidence that South America’s weather problems will increase demand for current-year U.S. soybean supplies, OR delay planting of Brazil’s winter corn crop to the point of risking production losses, AND/OR see hard evidence that Brazil’s rainy season will end early, dramatically reducing the size of the crop to necessitate greater dependency on U.S. corn supplies. All of that is possible, but thus far we have little evidence that any of the above is occurring.
Export Inspections today showed that all commodities performed on the high end of expectations. Marketing year to date corn export inspections exceed the seasonal pace needed to hit USDA's target by 13 million bushels, up from 11 million the previous week. Marketing year to date soybean export inspections fall short of the seasonal pace needed to hit USDA's target by 25 million bushels, after USDA upwardly revised the previous week's inspections by 12 million bushels, followed by a solid week this week. 61% of the weekly soybean volume went to China as did one cargo of wheat from the Gulf. Marketing year to date wheat export inspections fall short of the seasonal pace needed to hit USDA's target by 54 million bushels, versus being short by 58 million bushels the previous week.
Funds were thought to have been mostly buyers today.
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