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It would appear that the bloom was coming off the rose in the grain and soybeans markets into the close yesterday, but overnight, it would appear that the funds recognized the flower was just being stripped off the bush by the next round of rains passing through the Midwest. We have yet to push into higher highs for the swing but buying has returned again overnight which one has to assume is more short covering. It will be interesting to see the Commitment of Traders report after this week to see where the managed funds now stand. So note that the combination corn, wheat, bean chart is also recording a large outside higher reversal, coming from the lowest point traded since 2017, which I believe should be telling us that 1.) we have reconfirmed prices are at a point of value and 2.) the worst is behind us.
While not significant adjustments, the private consultancy group Strategie Grains updates projections for EU crops trimming prior forecasts. They are now estimating a wheat crop of 143.9 MMT versus the prior estimate of 144.8 citing drought conditions in Hungry as the issue. They also trimmed the barley estimate by 700k MT and corn 200k. Do keep in mind, all the estimates are still larger than last years crops, but of course, none of these are in the bins yet either.
Export sales last week were an improvement over the previous but still contained nothing to stir the hearts of any bulls or frighten the bear. For the week ending May 9th, we sold 553,300 MT or 21.79 million bushels of corn. This was a whopping 92% above last week but still 15% below the 4-week average and pretty much in the middle of expectations. Colombia was the top buyer with 226.7k MT, followed by Japan at 121.4k and then Mexico with 121.4k. Considering there was a negative number for bean last week, it did not require much to improve on that, but we did sell 370,900 MT or 13.63 million bushels. Germany was the top buyer at 122k MT, followed by Indonesia with 95.3k and then unknown destinations in for 38.5k. Old crop wheat sales were 26% above the previous week but we still below trade expectations, coming in at 114,500 MT or 4.21 million bushels. New crop sales were a sight better though as we sold 419,400 MT or 15.41 million bushels. The best buyer for the current crop year was Indonesia with 88.5k MT and for new crop South Korea with 93.7k MT.
As I have noted in previous letters this week, the key for a reversal is to see where prices close come Friday. In July corn this would be a close above 3.68 , July wheat above 4.43 and July beans above 8.36 and preferably above 8.40 . Note that doing so would not necessarily translate into an instantaneous rally but should confirm a bottom and set the stage for additional strength.
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