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On the Grains
Overnight grains are soft after yesterday’s strong gains as traders take stock of the drivers behind it. Top on the list was a wave of fund short covering as ongoing flood problems in southern Brazil shrink crop estimates even further and wet weather slows planting here. It’s the strongest signal yet that funds may finally be abandoning a long-standing bearish bias and it could feed on itself if positive chart action unfolds further.
Yesterday started out with so-so weekly export inspections. Corn loadings were in the upper end of the expected range, wheat loadings mid-range and soybeans near the low end. However, it didn’t matter when new short covering by funds kicked in for all the grains, beans, oil and meal. SBM was smoking hot on word that those southern Brazilian floods have not only stalled harvest but also idled some major crushing plants indefinitely. Wheat is getting support from ongoing issues threatening quality in EU wheat and production in both Russia and eastern Ukraine. With Australia’s 2023/24 crop and export prospects down sharply as well, fundamentals are slowly improving.

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