Corn bulls continue to talk about less than ideal planting conditions here in the U.S.. Bulls are also talking about strong demand and a more optimistic view by President Trump regarding NAFTA, something that takes a bit of risk away from a possible trade war or temporary blip in exports during a replacement or renegotiation of the trade deal. Remember, U.S./Canada/Mexico trade is valued at over $1.5 Trillion annually, so how it is handled is extremely important to many markets.
I should note however President Trump is talking about renegotiate another trade deal, this time with South Korea. As for global production, there's some talk of less than ideal weather conditions creating some small concerns in parts of northern China. As for Brazil, the second-crop corn conditions look good to this point and are offering up very little worry. In fact the International Grains Council came out Thursday and bumped their global production number higher by +2 MMTs.
Here at home traders will be keeping a close eye on the weekend rains as some areas might see extreme flooding and abnormally cool temperatures. How that delays corn planting or ultimately impacts yield is the million dollar question? I suspect we will all be much smarter when we return Monday and have a chance to see what the weather has delivered. Also keep in mind the USDA will be updating their planting progress numbers on Monday. After last weeks surprise bump in the pace it's hard for me to argue we won't see a similar play this next week.
Be careful betting on a big delay or a bullish tone by the USDA. As I pointed out Thursday with Illinois, Iowa and a few other big production states not far behind in planting it will be tough for the USDA to reduce their current yield forecast in the upcoming May report. Back in 2013 they cut the yield by a whopping -5.6 bushels per acre in the May report, but the bigger production states were much further behind. I'm not saying we won't get a bullish run during the growing season,I just want to be cautious and not get out ahead of myself too early. I've learned when weather at home starts to become more extreme, I tend to start trying to forecast market price and direction rather than focusing on proper risk management practices. Therefore I continue to keep all hedges in place and sticking with a longer-term mindset. I included below the most current drought conditions map. As you can see there's basically nothing on the map in comparison to previous years.