** 6:30 AM CDT CBOT Prices: November soybeans are up 3.00 cents at $10.025, Dec corn is up 3.25 cents at $4.06 with Sept Chi wheat unchanged at $5.40.
** AgResource AM Grain & Oilseed Comment: Good Morning! The overnight CBOT trade has been mixed in rather normal volume as traders access the Central US weather forecast while the wheat market pushes into a 2 day correction as the bulls accept profits heading into the weekend.
Thursday’s CBOT open interest tallies featured a 12,906 contract decline in corn, while soybeans increased 4,369 contracts and Chicago wheat 8,054 contracts. The gain in Chicago wheat open interest was a surprise and could be related to end users taking forward coverage?
For the holiday shortened week, corn is up around 9 cents, wheat is up around 4 cents and soybeans are up 37 cents. The soybean market is still covering a large net short position estimated around 72-82,000 contracts as of Tuesday’s close. The CFTC CoT data is expected out later this afternoon.
AgResource looks for a 2-3% decline in US corn/soybean crop conditions on Monday based on this week’s dry/warm weather. Producer comments in IL/IN and IA is how short corn is as it starts to pollinate and that soybeans are just not growing as they start their reproductive period? Short crops reflect the abundance of spring rains followed by warm/dry June weather conditions. Now the July heat and dryness in the Plains looks to further cut yield potential.
If the US is to produce a trend or above trend corn yield, corn plants can’t endure too many “bad” days. Unfortunately, amid all of the cool/wet spring weather and the June/July heat/dryness, corn has likely lost its chance to post trend or above trend yields in 2017. And the upcoming July weather pattern looks to place additional stress on the crop as the dire drought in the Dakotas spreads south and east into late July.
The US and EU weather models are not in the best agreement to end the week. The EU model is much more consistent with prior runs and remains our forecast model of choice. The US GFS model is farther west with the high pressure Ridge and allows for cooler temps and some shower chances across the E Midwest. Any real heat would be relegated to early next week with seasonal temps following. The EU model has the mean position of the high pressure Ridge across the Intermountain West today with some de-amplification on the weekend before the mean Ridge position shifts east and amplifies again. This would produce more heat across the Plains with impulses of that heat (90-100’s) pushing into the Western and Southern Midwest in the 5-12 day period. The extended EU model forecast maintains a Central US Ridge position into July 22nd.
Neither the US nor the EU model offers much rain to the Plains or the W Midwest over the next 14 days with the NW upper air flow offering widely scattered shower chances to the Lake States and Ohio Valley. It’s the heat and lack of rain that is rapidly drawing down Midwest soil moisture.
In Ukraine, the forecast offers a few showers next week, but totals will be well below what is needed to aid pollinating corn plants.
The CBOT is likely to add additional weather premium into price heading into the weekend. Our concern remains a deepening Plains and W Midwest drought.
** July 1-7 Rainfall as a percent of Normal:
