** The push in July Minn wheat to new 2 year highs (above $6.00/Bu) caused general nervousness among CBOT bears, and short covering has been the result. Much of the covering occurred during the first 45 mins of trade with corn back testing resistance at $3.80 while July Chi wheat has rallied above $4.40.
The soybean market continues to try to carve out a bottom, but less certain is that the current warm/dry pattern is having much if any adverse impact on the US soy crop? Thus, the soy complex appears to be tagging along with the gains in the grains – rather than blazing its own new bullish trail.
** KC wheat has surged above its 50 day moving average at $4.355 and a close at this level will likely trigger new fund buying at the close. July Chi wheat has also leaped above its 50 day moving average with the next upside price target being the 100 and 200 day moving averages at $4.50-4.53. The wheat market is suggesting that seasonal lows are in place and that the marketplace is starting to pay attention to reduced 2017 world wheat production prospects.
** Corn has also formed a reversal up with today’s trade taking out yesterday’s high and low. The market is adding weather premium on dry weather trends.
** CBOT floor brokers report that funds have bought 11,000 contracts of corn, 3,200 contracts of soybeans, and 7,000 contracts of wheat. In soy products, funds have bought 3,000 contracts of soymeal and 3,000 contracts of soyoil.
** Brazil’s CONAB will be out Thursday AM with their updated crop production estimates. Most expect that CONAB could raise their soybean production estimate to 112-112.5 MMTs in soybeans and 95-96.0 MMTs in corn. CONAB has a long history of being too low with their winter corn production estimate and then catching up at a later date.
** Farmers in IL, IN and portions of MO are all needing rain. Replanting is ongoing and dust is the result after the recent spate of warm/dry weather has dried out topsoils. There are field reports of corn starting to “roll” as the hard soils are not allowing corn to root down into subsoil moisture. Unfortunately, there is just a limited chance of rain for these dry areas for the next 7-9 days. The Central US soil moisture profile will continue to decline and the need for rain will grow with time. Worry over some flash drought is being discussed.
** HRW wheat yields continue to be variable and disappointing in OK and TX. Test cuttings will get underway in portions of SW Kansas this weekend. The recent dryness and heat is causing increasing stress on the N KS and NE crop.
** Midday GFS Weather Update: The midday GFS model is similar to overnight run for the next 7 days in that a mostly warm/dry pattern will be maintained with warm to hot weather returning Friday and on the weekend. High temps look to reach the lower to mid 90’s with a few lower 100’s across the W Midwest and the Plains. The heat persists into the first half of next week.
A few showers fall across N Dakota but most amounts look to remain less than .80” except for teh far western aresa where some heavier totals could fall. The remainder of Midwest holds in a generaly dry flow for the next 10-11 days. There are hints of better rains in the 12-15 day period, but our confidence this far out is low. The GFS has been far too wet in recent day runs.
** AgResource Market Comment: Funds are heavy short and starting to become nervous as a warm/dry weather pattern is established across the Midwest/C Plains. Monday’s rise in US corn crop conditions is not having a bearish impact as traders fret over future crop declines as soil moisture retreats. Friday’s USDA report looms, but it’s the projected hot/dry Central US weather that fund managers are focused on.
** GFS 10 Day Rainfall Forecast:
