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With nothing alarming in the weather outlook this week and a rather benign export demand lineup, the path of least resistance for the grain/soy markets this morning is lower. Only soybeans and meal have actually posted lower weekly lows, but if grains to not find a positive stimulus quickly, they may follow suit as well. It is worth noting managed money was feeling quite optimistic last week as they purchased 63,000 contracts of corn, 7,000 beans, 28,000 meal and covered 26,000 contracts of wheat but actually sold 21,000 bean oil, which by the way is the sole strength in the complex this morning. Do note that on the combination corn, bean, wheat chart we reached right against the highs of the calendar year but so far have been unable to cross over. This must be a feeling similar to what Moses experienced when he reached the river Jordan. On the docket yet today will be export inspections, which would not appear to hold in store anything out of the ordinary and then in the afternoon, planting progress updates. The trade is expecting corn planting to have reached the 40% mark and beans pushed to around 20%.
We do have the May production and supply/demand reports to look forward to on this coming Thursday, and as we have noted before, this will be the first with predictions of the 2018 crops. Trade estimates are as follows; 2017/18 domestic ending stocks for corn at 2.177 billion, beans 543 million and wheat 1.067 billion. For the 2018/19 production, we have the average estimate for corn of 14.091 billion using a yield of 174.1, beans at 4.32 billion from a yield of 48.8 and a wheat crop of 1.774 billion. 18/19 year ending stocks are expected to come in at 1.629 billion for corn, 534 million beans, and 931 million wheat. Globally, 2018/19 ending stock are expected to fall in around 182.75 MMT for corn, 90.52 MMT beans, and 269.18 MMT wheat. The average estimates for Brazilian production are 116.3 MMT for beans and 88.6 MMT corn and Argentina 38.4 MMT beans and 32.2 MMT corn.
This is not to say that the commodity world is completely devoid of positive activity this morning as it would appear that the energy sector is alive and well. The combination of the worsening economic situation in Venezuela and the tensions building with our relationship with Iran have created supply concerns and an extension of the rally. While I certainly have no idea what will unfold with Iran and the government in Venezuela should have imploded years ago, but gauging from the position of the crude market, I have to believe it will require something stunning to extend this rally much further.
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