ARC estimates that as of early this week managed funds had established a very small net long position, which has been steadily liquidated since. However, we also note that any changes in the US weather pattern won’t occur in the next 10 days, and our bet is that US yield falls between 165-167 Bu/Acre based on expanding drought across the Plains/W Corn Belt. Await rallies to extend sales and hedges.
Otherwise, US export sales continue to suffer as South American ship lineups grow. US sales through the week ending July 6th totaled just 6 Mil Bu, vs. 5 Mil during the prior week, and should this pace continue the USDA is unlikely to raise its US export forecast.
Argentina’s crop this week is 56% harvested, vs. 48% on this week a year ago, and updated world fob prices are attached. South American corn holds a sizeable discount to US origin and also to global feed wheat, though it’s tough the bearish S American corn at $150/MT – particularly as that market finds demand.
Our work indicates that, amid expanding dryness, a new plateau has been reached. Dec 17’s fair value is pegged at $3.70-4.10 into late August. We advise against selling into breaks.
