July corn was trading 2 cents lower into 7:30 AM central time. Outside market forces look bearish today with a surge up in both the dollar and bonds and weakness in energy and metal markets. China futures were down 0.5% overnight. With a weak trend for exports and concerns for gasoline demand, the corn market seems to need some help from the weather in order to extend the solid gains from yesterday. Dryness in the southern Midwest into early next week is supportive but traders remain on edge over just how much rain may hit as Midwest corn will be pollinating soon. Southern parts of Missouri and Illinois could be pollinating now and dryness stress could be an issue. Traders also remain concerned with a poor start to some areas of China. South Korea seeks up to 170,000 tonnes of corn and Malaysia seeks 120,000 tonnes of optional origin corn. December corn closed up 17 cents yesterday moving to the highest level since May 22nd. Funds were noted as heavy buyers on the day. Outside positive forces eased into the mid-day but a drier forecast for next week helped to spark more concerns for declining crop conditions into the key pollination period ahead. The 11-15 day forecast models also turned hotter with talk of mid-90's into the Corn Belt a possibility. Until the heat moves out of the longer-term forecast models, the market may find some underlying support. Weather in China is also a concern with some areas turning hot and dry. Old crop ending stocks are expected to decline by 25-30 million bushels for the supply/demand update next week as compared with 851 posted last month. New crop ending stocks are expected near 1.75 billion bushels from 1.881 billion last month. Traders see Argentina corn production revised down by about 1 million tonnes from last month's estimate of 21.5 million tonnes. From the May to the June report, the USDA has on occasion lowered their yield forecast in the supply/demand reports but this is usually due to late plantings. Declines occurred in 2009 (down 2 bushels per acre), 2008 (down 5), 2002 (down 2.1) and 1995 (down 5.9). Weekly export sales came in at just 399,000 which was well below trade expectations which China noted as canceling some old crop and new crop sales.
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