Corn prices are steady to start the morning, but only after the new-crop DEC18 contract posted a new contract low close yesterday at $3.71^4. Even though the DEC18 contract traded as low as $3.60 last week, it rallied back that day and managed to close at $3.75^4, yesterday that wasn't the case, we didn't rally back. With good rainfall coverage the past several days across the U.S. corn belt and a bit more in the nearby forecast, it's tough for the bulls to talk wide-spread production problems. Yes, there are some pockets of dryness we continue to monitor, but there's just not enough of a story to spook the bears.
The USDA continues to confirm the amazing start, by showing 77% of the crop is still rated "Good-to-Excellent" heading into the first week of July. The USDA also showed the U.S. crop is fairly well advanced, with 5% now though to be "silking" vs. the 5-year average of 3% by this date. Big production states like Illinois, Nebraska and Indiana are all showing the crop ahead of schedule. Looking ahead, the USDA will release their updated acreage estimate. The trade seems to be looking for a +250,000 to +750,000 acre increase in corn acres. I would like to say those numbers are too high, but with very few planting problems it's tough to dispute the argument.
The trade will also be closely monitoring the weather forecast in the days ahead as the corn crop starts to enter the more critical pollination phase. From what I can gather there's certainly some heat in the forecast and some talk of dry conditions moving towards the eastern portion of the belt. It's just tough for the market to envision this with the current cool and wet conditions in many locations.
From a macro perspective, the trade continues to battle negative trade headlines and uncertainty out of Washington. There is a bit of good news out of Brazil, where AgroConsult lowered their production estimate for the countries second-crop production from 57 MMTs down to 55 MMTs. They also now have their Brazilian corn export estimate at 28 MMTs, which is lower than the USDAs current estimate of 29 MMTs.
Technically, the market remains in a tailspin and appears as if it might want to re-test last weeks lows, or push itself down to between $3.50 and $3.65 per bushel. Resistance to the upside for the DEC18 contract still appears in the $3.80 to $3.90 range. If there is a bright spot in the recent data, I suspect it's the fact Minnesota's overall GD/EX crop rating fell by -4% this past week and Iowa's fell by -3%. The bad part, both of these top producing states still show over +80% of their crop in GD/EX condition. I should also note, the Illinois crop rating improved and is now showing 83% of the crop in GD/EX condition, while Nebraska continues to show an amazing 86% of the crop in GD/EX condition.
Below are some additional specifics...
States Where Conditions Improved
Arkansas +4% from 68% to 72% GD/EX vs. 80% last year.
South Dakota + 4% from 66% to 70% GD/EX vs. 46% last year.
Michigan +3% from 69% to 72% GD/EX vs. 67% last year.
Illinois +2% from 81% to 83% GD/EX vs. 62% last year.
Texas +2% from 39% to 41% GD/EX vs. 70% last year.
North Dakota +1% from 81% to 82% GD/EX vs. 56% last year.
Kentucky +1% from 86% to 87% GD/EX vs. 85% last year.
Nebraska stayed at 86% GD/EX vs. 74% last year.
Indiana stayed at 76% GD/EX vs. 46% last year.
Tennessee stayed at 77% GD/EX vs. 87% last year.
States Where Conditions Deteriorated
Colorado -6% from 81% to 75% GD/EX vs. 83% last year.
Kansas -6% from 61% to 55% GD/EX vs. 61% last year.
Minnesota -4% from 88% to 84% GD/EX vs. 78% last year.
Iowa -3% from 84% to 81% GD/EX vs. 79% last year.
Wisconsin -3% from 90% to 87% GD/EX vs. 69% last year.
Missouri -2% from 48% to 46% GD/EX vs. 66% last year.
North Carolina -2% from 53% to 51% GD/EX vs. 77% last year.
Pennsylvania -2% from 65% to 63% GD/EX vs. 85% last year.
Ohio -1% from 87% to 86% GD/EX vs. 58% last year.