Not surprisingly, weather premium was extracted from the corn market, as the major forecast models added rainfall amounts and coverage to the Midwest, and the EU, GFS and Canadian outlooks are in broad agreement through the next 4-5 days. Today’s action is warranted, but we caution against changing one’s outlook on day-to-day fluctuations in weather forecasts, and enough concern still exists to underpin the market on breaks. A turnaround is likely on Tuesday.
Crop conditions as of Sunday were pegged at 67% GD/EX, vs. 68% last week and 75% on this week a year ago. Near term relief does indeed lie in the offing across much of the N and E Corn Belt, but moisture deficits will be growing in KS, NE and SD in the next two weeks and without trend/above trend yield across the far W Corn Belt, it’s unlikely that US national yield can exceed 170 Bu/Acre. The markets will of course trade the latest forecast, but we maintain that, given weather to date, the most probable US yield lies between 166-169. Oat & barley conditions are also down on last year.
Importantly, the market lacks a major demand driver, but a more complete US weather pattern shift is needed to attract meaningful fund selling. ARC awaits clarification on late June/early July weather before adding to sales.
