The USDA on Wednesday is expected to tweak its old crop balance sheet slightly, and might lower new crop yield 1-2 Bu/Acre, but otherwise corn data should be rather uneventful. However, ARC does mention the North American weather forecast is getting worse, not better, and heat looks to reach into the Western Midwest by the middle of next week.
CONAB this AM raised Brazilian corn production 2 MMTs, which was largely expected, and South American basis remains historically weak. Argentine basis is still negative, but at the same feed and milling wheat prices have surged. This is the opposite of last year. South American exporters will undercut all others through late autumn, but S American surpluses won’t fully displace feed wheat use, and there’s still room for sizeable corn shipments to traditional importers.
The market took a brief pause today, but additional weather premium will be added without a rapid and dramatic shift in US growing conditions. Note that temps across the C Plains today were again in the low-100s, and similar readings will expand into MO & W IA next week. We maintain an upside target of $4.30-4.45 basis Dec ‘17.