The US weather pattern offers a more seasonal pattern to the Plains and Western Midwest in the next 10 days, but maintains cool temps and unwanted showers in the Eastern Corn Belt. Measuring nationwide yield potential remains difficult, but our work does suggest additional rain in IL, IN, ON and MI is not a positive, and is certainly not needed. Otherwise, the dollar rebounded slightly and crude fell to losses of $2.75/barrel.
US corn export sales through the week ending 18 Mil Bu, down 10 Mil from the period week, and importers are slowly beginning their transition to South America. Argentina’s harvest progress has reached 36% complete this week, vs. 29% on this date a year ago, and Argentina’s crop in the next few weeks will satisfy its domestic consumption. New crop Argentine exports will begin in bulk beginning in July.
US export demand will no doubt suffer in the next 3-4 months as South America’s surplus finds the global pipeline. However, once this extra supply is digested a more supportive outlook is advised. US corn’s yield potential, at the least, is down from recent years, and as cash prices in South America fail to offer much incentive to expand acres, supply and demand will be more balanced in 17/18 and beyond. We also mention that dryness lingers in Eastern Ukraine, where some 50% of its corn is grown, and substantial moisture relief is not indicated in current forecasts. Downside risk below $3.75, Dec, hinges upon crop ratings at or above last year. AgResource is in no hurry to price 17/18 production below $4.00 December futures.