Corn followed wheat to modest gains, and the issue is not so much near term rain, but rather the trend next week and beyond? Slight boosts in soil moisture lie in the offing for the E Corn Belt over the next 5-6 days, but the question remains whether drought expands or contracts in the next six weeks. Expect back and forth trading to continue, but ARC’s concern is that hot/dry weather could return in late June and early July.
There’s talk that China aims to eliminate its value added tax on US DDG imports, but there’s existing anti-dumping and anti-subsidy tariffs that will hinder any major shift of Chinese DDG imports nearby. Argentine basis has fallen further (corn is offered just $.07/Bu over futures for August delivery), Brazilian basis is weak, and S America stands to dominate world corn trade beyond the next 30 days.
The downside price risk is limited to 10-15 cents until more is known about the US weather pattern during July. Note too, that Ukraine’s Corn Belt remains in a dry trend, and vegetation health there is much worse than a year ago in mid-June.
Argentine corn export offers are $.25/Bu below the US which will act as a drag on CBOT rallies. We see July corn supported below $3.70.
