July corn rallied to a fresh 4-month high on a continuation basis, and all contracts traded pretty easily through technical resistance. ARC maintains it’s premature to be overly bullish, and follow through will in large part hinge upon the upcoming weather forecast. However, soil moisture will be in sharp decline in the next 10 days, which places much more pressure on the return of needed rain in late June – which has also been trending drier in recent days. Until a pattern change is confirmed, new bearish bets are risky. Funds bought an estimated 11,000 corn contracts, though are still short a net 180,000 — which is massive.
US ethanol futures have rallied 9% since mid-May, which has more than offset the recent gain in corn futures. Futures-based ethanol margins are at left, and there’s so far no indication that the pace of weekly ethanol production will slow.
The world cash wheat market is firming, and even EU feed wheat for August delivery is offered at $172/MT, a full $8/MT above Gulf corn. There’s just not much available to support a major collapse in corn prices nearby, and a watchful eye will be kept on whether drought expansion occurs south and east from the Dakotas?