CBOT corn fell 4-5 cents amid hints of improved warm/dry weather across the N Plains and the W Midwest next week, and a general of follow through fund buying. ARC also mentions energy markets were rather weak, with crude falling to a one-month low at $47.60. Gasoline and ethanol prices followed, which is weighing on both ethanol production and blending margins.
South America’s cash market was steady after Monday’s rally. Argentine fob premiums for Jun-Jul rest firmly at $.16-.18/Bu, Brazilian basis is quoted at $.25-.30 over, and US corn maintains modest premiums for July forward delivery despite near record low Gulf basis. In the near term, the market still appears to be one looking for global demand.
The US forecast is drier across the Central Plains and Western Midwest in the next 10 days. Temps there look to reach into the 70s, and rainfall will be limited to lite/scattered events. It will take 5-7 days of warmth and sunshine before heavy machinery can return to the fields.
ARC’s concern is centered on; IL, IN, OH, MI and KY, where another round of soaking rainfall is forecast late week. This will exacerbate recent flooding. There’s also no sign of sustained warmth in the E Midwest through May 15th. Prevent plant is an increasingly attractive option this year.
We advise against chasing breaks and rallies, but rather fair value without prolonged rainfall in late May is pegged at $3.65-3.90, basis July. Rising cash wheat prices across the Plains will underpin corn on breaks. The forecasts hint that cool to cold wet weather will persist into June.
