• HEADLINES: Midday GFS weather forecast lacks pattern change; crude recovers.

• The addition of risk premium continues, and while new crop corn and soy contract are off morning highs, soy futures are heavily overbought and corn is nearing overbought technical levels, there is still no indication of a needed Central US weather pattern change into July 1. The market has been somewhat tepid in digesting worst-case scenarios as it is still only mid-June, but we reiterate that US corn and soy yield loss of just 3-4% relative to trend triggers major adjustments to US, exporter and global balance sheets. And no longer can the market place its focus on 16–30-day outlooks given the immediate need for soaking rainfall in all but the Central Plains, and so large up and down moves are anticipated into mid-summer based on latest model guidance. Our concern is one of pattern stagnation, with a measurable portion of the US crop to enter pollination in just 3 weeks. Yield loss of 5%+ mandates supply rationing. Keep in mind this year’s drought-stricken crops in Argentina, while Ukrainian vessel movement in the Black Sea has been effectively halted.

• French winter wheat crop ratings this morning were lowered 3 points to 85% good/excellent, well above last year’s 65% but down from early season ratings of 92-93% good/excellent.

• Our  contacts suggests EU wheat yields will be highly variable, but another hike in coming WASDE reports is unlikely. Very poor crop health is noted in far N Europe, including the key Baltic exporting region. Better rain lies ahead for France, but the Baltics and Scandinavia will be left arid.

• EU corn and wheat markets continue to participate in the global ag markets’ rally, though only modestly given large existing stocks there and as Brazilian corn becomes available to European importers in late summer. But the EU oilseed market has soared, and this underscores the importance of US and European yield performance if Northern Hemisphere stocks tightening is to be prevented. Spot EU rapeseed has pierced through an 8-month downtrend line this week. EU rapeseed oil has also rallied with summer/autumn demand being found.

• There is an otherwise dearth of fresh news, and the trade is well aware that three full days of potential US forecast changes lies ahead. Like this week, a big move is anticipated Sunday night.

• This afternoon’s CFTC report is expected to show large managed fund short position in corn and wheat. Managed funds’ length in soybeans as of Tuesday is estimated at 18-20,000 contracts.

• The midday GFS weather forecast is similar to this morning’s solution. Little/no rain is offered to IA and areas eastward into June 26, and equally important is the arrival of summer heat to the N Plains and Midwest beginning next Tues/Wed. Forecasts have been consistent in calling for a rapid northward shift in the jet stream late this weekend, with blocking high pressure aloft the Plains and Midwest likely to fuel warmth/dryness into the very end of the month. Confidence in details beyond 5-7 days stays low, but a pattern shift prior to July 1 remains unlikely.

• Periodic profit-taking corrections keep volatility in place, but until there are at least hints of a US weather pattern change we doubt that bearish trends can be sustained. US dryness in the first half of July would be a big deal globally.

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