• The USDA Crop Report was bearish on stocks, but the bullish shocker was seedings as total 2020 US 8 crop seeding declined 6.72 million acres. The decline was based in corn where seedings fell 5 million acres to 92.0 million acres. This was 3 million acres more than the average trade estimate. The FSA Farm Service crop data now becomes important as analysts try to understand why US farmers did not plant nearly 7.0 million acres with improved spring weather.

• NASS estimated 2020 June 1 corn stocks at 5,223 million bu, up 22 million bu from last year with the March-June feed residual estimate at 813 million bu, down 303 from 1,116 million bu last year. The June 1 stocks were up 234 million bu from trade expectations.

• US wheat stocks at 1,044 million bu were 65 million bu larger than expected (fall in feed/residual use) while US soybean stocks at 1,386 million bu where 5 million bu larger than forecast. The US corn stocks total was a bearish surprise.

• March to June 8 crop US seeding changes were down 6.72 million acres, which is larger than last year. A year ago, NASS indicated that the extremely wet spring pushed farmers to seed just 6.0 million acres less than the March Intentions.

• This is where the confusion begins in relations to NASS. A year ago, NASS overstated US crop seedings relative to trade expectations a record amount while this year was a record large miss under trade estimates. Trying to understand or explain where all the acres went is difficult.

• NASS estimated 2020 US corn seeding at 92.0 million acres, a record miss vs trade estimates at 95.1 million acres. North Dakota corn seeding was down 800,000 acres while IL/SD was off 400,000 acres. NE corn seedings were 700,000 acres. Other states add up to the combined miss of nearly 5.0 million acres from the March Intentions. Assuming trend line yields 178.5 bushels/acre on the lost acres adds up to around 850 million bu of US corn production.

• Research notes that US 2020 soybean seeding expanded by 300,000 acres to 83.8 million acres while US all wheat acres were pegged at 44.2 million acres, down 500,000 from intentions. Lost US corn acres were expected to be planted to soybeans, but somehow producers either enrolled those acres in the Prevent Plant program or left them lay idle.

• Where do the reports leave the US stocks. WASDE is likely to cut 2019/20 US corn feed/residual by 150-175 million bu in July and make a like adjustment to the 2020/21 feed/residual for a combined 300-350 million bu cut to domestic use.

• However, USDA’s corn seeding estimate cuts 850 million bu off supplies which means that 500-550 million bu will be cut from 2020/21 US corn end stock estimates which look to drop US 2020/21 corn end stocks to a large 2,800-2,850 million bu. Such stocks would justify December corn trading in a range of $2.90-3.60 assuming trend line yield. Remember that every 1 bushels/acre above or below trend adds or subtracts 85 million bu to US corn stocks.

• 2020/21 soybean end stocks are forecast at 425-475 million bu as US seedings did not expand on corn’s loss. While 2020/21 US wheat end stocks will rise closer 940-960 million bu, which is more than adequate.

• The USDA Seeding report is hard to explain in that a year ago with horrendous cool/wet spring weather the US lost 5.6 million acres from intentions and this year the loss was 6.7 million acres with okay conditions. The report was a bullish corn shocker, but we doubt that US farmers were able to enter all those acres in Prevent Plant. Our longer-term view stays bearish, but less so than before the report on the decline in US corn/soybean seeding.

• Last week saw grain prices fall (as we reported) amid upgrades in crop forecasts, harvest pressures and ongoing Covid-19 demand cut fears. In addition the funds added to short positions. We have now seen a further cut in EU wheat output as forecast by the EU, 4.3 million mt down to 117.2 million, which is now 7% below average. That said, global production continues to grow according to the IGC who pegged 2020/21 output at 768 million mt, up from 762 million in 2019/20. EU woes are being offset by improved prospects in China and Australia continuing the theme of abundant global supplies. Prices are expected to remain pressured however as the threat of Russian export quotas from January 2021 could well point towards a front loaded export programme.

• In a reversal of Friday’s price action, corn/wheat futures are higher while soy futures hang in the red amid a concern for an expansion of seeding within Tuesday’s NASS report. The average trade estimate looks for a decline of just over 2 million acres of corn and an increase of 1.8 million acres of soybeans which is working to push traders to cover soybean/com spreads. Wheat is following corn as the US winter wheat harvest pushes closer to being 50% completed. The volume of trade has been active. US farmers are hoping for a bullish report to advance old crop corn sales. Movement last week was one of the best in weeks and most farmers are looking to sweep out their bins. We look for a mixed close with July weather forecasts being closely eyed along with the upgrade to the EU weather model on July 1.

• Chicago brokers report that funds have bought 11,300 contracts of corn and 3,200 contracts of wheat while selling 2,500 contracts of soybeans, in the products, funds have sold 1,300 contracts of soymeal while buying 1,900 contracts of soyoil. It is the coming end of the month and quarter which has some fund managers looking to bank profits.

• Weekly export inspections for the week ending June 25 were; 48.6 million bu of corn, 11.9 million bu of soybeans, and 18.9 million bu of wheat. China shipped out a modest 56,000 bu from the interior. The US soybean and wheat export pace was deemed disappointing by Chicago traders.

• US growers report that their crops have improved following last week’s sunshine, warmth and needed rainfall. The improvement should allow for modest gains in good/excellent ratings as soybean/com crops grow. Normally, corn looks its best just prior to pollination when ratings tend to seasonally start to stabilise or slide. We would estimate a 1-2% gain in good/excellent ratings with corn rising to 73-74% good/excellent and soy 71-72% good/excellent.

• Chinese interior corn prices have risen to the same levels as wheat as the recent weekly auctions have failed to stem corn’s price rise. According to USDA data, China has an abundance of corn and wheat stocks, but much of the supply is under Government control. Potentially, Chinese hog feeders could use feed wheat vs corn, but the key is that China wants to underpin its farm income. China needs a high domestic corn price to underpin its 2020 farm income profile.

• Warm temperatures and hit-and-miss showers will be the theme of the late week and weekend weather pattern across the Midwest. The midday forecast is slightly cooler and slightly wetter than the overnight run. The flow of Gulf humidity remains into the Central US which will fuel frequent afternoon thunderstorms. This is not a weather pattern that will choke off Central US rainfall. However, no organized rains look to drop into Tuesday July 7. The 11-15 day forecast keeps high pressure ridging intact aloft the Plains and W Midwest. Light showers will be widespread across the N Plains and Great Lakes, but rainfall in excess of 1″ will be confined to the eastern Dakotas, MN and pockets of IA.

• A sizeable fund short in Chicago wheat and a near-record fund corn short are being unwound prior to NASS’s stocks and seedings data due at midday Tuesday. Some premium is being added amid concern over a lasting pattern of above normal Midwest temperatures, which will overlap the beginning of corn pollination. Stocks and seedings will grab market attention briefly on Tuesday, but thereafter it is all weather into early August.

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Weekend summary 26 June 2020

• Corn, soybean and wheat futures are lower in midday Chicago trade with December corn falling to a new contract low of $3.24. July corn futures have not scored a new contract low as cash basis strength is underpinning this market heading into first notice day on Tuesday. Funds have been aggressive sellers from the opening on favourable US weather, Covid-19 fear and a worsening economic outlook from the IMF. Chicago either needs to find new demand (China) or a dramatic change in weather to sustain a recovery. We look for a lower Chicago close with the US winter wheat harvest passing the 40% on the weekend. Wheat futures should be supported better than either corn/soybeans.

• July Chicago options expire on Friday with most farmers having to be out of any cash basis or DP contracts by Monday’s close. Selling from July options is noted with US farmers sitting on sizeable amounts of old crop corn/soybeans. US merchandisers report that farmers are waiting/wanting another few good rains before sweeping their bins clean. A pickup in cash related selling is forecast without a dramatic change in the weather forecasts looking forward into mid-July.

• Chicago traders estimate that funds have sold 12,000 contracts of corn, 8,600 contracts of soybeans while buying 2,300 contracts of wheat. In soybean products, funds have sold 2,800 contracts of soymeal while being flat in soyoil.

• The USDA Weekly Export sales report for the week ending June 18 showed 19.1 million bu of wheat, 18.2 million bu of old crop corn and 42.7 million bu of old and new crop soybeans. The wheat sales were better than expected, while corn and soybeans were a touch disappointing.

• For their respective crop year’s to date, the US has sold 251.8 million bu of wheat (down 3.5 million or 1%), 1,652 million bu of corn (down 267 million or 14%), and 1,646 million bu of soybeans (down 103 million or 6%). China booked another 4.7 million bu of US old crop soybeans and 10.7 million bu of new crop. China has now secured a known 15.8 million bu of US old crop soybeans and 125 million bu of new crop. The Chinese purchase pace of US soybeans is disappointing.

• US Sec of State Pompeo will be visiting the EU to hold a session on the transatlantic awakening to the truth of China, and its threat to the world. The session will not be seen favourably by the Chinese. We have no way of knowing as to how the planned EU/US summit will impact the Phase One Deal, but Chicago futures sold off on the announcement. The political rhetoric is likely to grow heading into the Nov 3 US election; A growing worry for the massive demand that is needed by China to fulfill its Phase One Ag Purchase pledges.

• A progressive weather pattern will be maintained across N America. Systems within a strong westerly flowing jet stream will produce showers/storms every 3-4 days. Rain totals from each system are forecast in a range of 0.35-1.25″. The next rain chance occurs from late today into the weekend with a second chance mid next week.

• The 11-15 day forecast has a moderate upper ridge across the Central US, but the ridge does not look strong enough to block moisture chances. More likely is that the ridge will produce summerlike heat with near normal rainfall. A strong upper level trough is evident across the PNW which looks to be dragged eastward by a seasonally strong jet stream.

• A longer term bearish outlook is offered in corn, but this is no place to be making new sales ahead of a key USDA crop report next week. We favour selling material rallies in corn and soybeans. The wheat market is likely in the early stages of forming a seasonal low. Kansas wheat yield data is disappointing across the western half of the state. China is on holiday into the weekend. No new corn or soybean sales were announced this morning. Hopefully, China picks up its buying next week.

• Mixed in a reversal of Tuesday’s price action are Chicago values at midday. Soy/wheat values are weaker while corn bounces on better than excepted US weekly ethanol production. Trade volume is modest as traders do not want to expand their market risk heading into the weekend and next week’s USDA June Stocks/Seeding Crop Report. And firm old crop corn basis bids are underpinning July corn futures. Farmers report that they want another rain before they start parting with stored old corn/soybean stocks. The US farmer has been a slow seller of old crop grain not liking the price amid a spate of June dryness. Should Mother Nature produce another few good rains, US farmers will start the process of sweeping out their bins for the new crop. The calendar is against storing old crop grain beyond the July 4 weekend.

• We doubt that corn, soybeans or wheat can sustain much of a rally amid favourable Central US weather. The long-range Midwest forecast is less certain, but the recent rains and mild temperatures this week will improve growing and crop conditions. A mixed Chicago close is expected with US wheat futures trying to forge seasonal lows while corn confirms seasonal highs.

• Black Sea July/August wheat/barley prices are struggling to decline as shorts are trying to cover or roll forward their July sales. July/August Russian wheat is bid at $205/mt and offered at $207/mt. The Ukraine/Russian winter wheat harvest is just starting, but with the domestic market well above export offers, exporters short wheat for July shipment are going to have to raise bids to secure new crop supply. Russia/Ukraine and Romania are starting the new crop year with exceptionally low carry-in wheat stocks, which will make the transition to new crop difficult. Advice would be don’t be short Russian July wheat!

• The daily Kansas Wheat Harvest report for day 7 indicated a disappointing yield trend for W Kansas. The yield trend is declining as the harvest works north and west. We would trim our Kansas wheat yield by 1-2 bushels/acre accordingly.

• The EIA’s weekly ethanol report was positive which rallied Chicago corn futures following its release. The ethanol data confirmed weekly production of 263 million gallons, which is still below the USDA’s forecast of 295 million gallons needed to reach the WASDE forecast of 4,900 million bu. Research argues that WASDE will reduce its 2019/20 ethanol production forecast by another 50-100 million bu in July. A US 2019/20 ethanol grind of 4,750-4,815 million bu appears right.

• A progressive weather pattern will be maintained across North America. Systems in a strong westerly flowing jet stream will produce showers/storms every 3-4 days. Rain totals from each system are forecast in a range of 0.35-1.25″. The next rain chance occurs from Friday into the weekend with a second chance mid next week and third during the July 4 weekend. The 11-15 day forecast calls a tropical storm system to make landfall around Panama City, FL and push northward into the Ohio Valley. This system would produce heavy rains of 1.50-5.50″ from the FL Panhandle north to northeast into Tennessee/Kentucky and Indiana/Ohio. Our confidence in this Tropical system is low but would grow if its forecast is consistent.

• Central US weather remains the key fundamental impacting corn, soy and wheat prices. The forecast is favourable and US crop sizes are growing. The US looks to harvest a corn crop that will be 2 billion bu more than last year, likely a record. It is the huge size of the US corn crop which will cap rallies in soy/wheat. China is not showing today as a large buyer of US ag goods today which leaves Chicago values in liquidation into the close.

• Mixed at midday is Chicago trade with wheat and old crop soybean futures being slightly higher while corn prices sag on record large US production potential. The 1% gain in good/excellent corn conditions to 72% with future condition gains forecast into mid-July has corn prices under pressure. The 2020 US corn crop has record yield potential with normal Midwest weather for the next 3-4 weeks.

• Soybeans and wheat are firmer on fund short covering and news that China secured 2 cargoes of US soybeans. We hear that those beans were sold last week and that the seller wanted to pull them forward amid the ongoing US/China political brouhaha. The rally in soy and wheat appears to be largely technical in nature with the July/November soybean spread inverting to uncover US farm sales. Cash soybean basis levels are firm nearby with crushers pushing to add forward coverage. November and back end US soybean futures are weaker on the coming abundance of supply and potential for NASS to find 1-3.0 million acres of additional US soybean acres in next week’s Seeding Report. We look for a mixed close with December corn futures closing below key support at $3.39.

• Late last week there was cash connected talk that China was asking for prices on US ethanol and corn. In fact, many argued that China could be releasing 5.0 million  mt of TRQ’s for new world corn imports. Today, those cash rumours are gone. We hear that no US ethanol sold to China, and Asian sources suggest there is no immediate plans for China to issue a new round of corn TRQ import licenses. Remember, that for a private buyer to take US corn requires a GMO import license. China demand for grain and ethanol appears to have evaporated.

• We hear that China is still asking for meat/soy/grain certification from exporters that US ag shipments are tested and Covid-19 free. The science on Covid-19 says such certification requests (by China) are without merit. But China claims that following a European salmon incident last week, there is a means of transmission. The debate is ongoing, and the hope is that science will make China agree. However, the longer this goes on the more China will argue their case. The US ag industry hopes that this gets resolved quickly.

• Because of the recent increase in US Gulf corn prices, Brussels has dropped the import levy to $4.60 €uros/mt from $10.40 €uros. The levy is reviewed month-to-month based on the US Gulf and world corn price structure. As world corn prices decline, the levy will rise to prevent more sizeable feedgrain imports and protect EU feedwheat and maize producers.

• The US$ was under pressure with the €uro rising to $1.138 while the Brazilian Real traded up to 5.16:1. The Argentine Peso fell to 70.04-a record low.

• A progressive weather pattern will be maintained across North America over the next 2 weeks (ending July 9). Short waves in a strong NW flowing jet stream look to produce showers/storms every 3-4 days. Rainfall totals with each system are forecast in a range of 0.5-1.25″ with the best chance for heavy rain occurring across IL, IN and OH.

• The 11-15 day forecast calls for a ridge of high pressure over the SW US with any heat impacting the 4 corner area. This is a different solution from what has been shown previously. The ridge reaches into the S Plains but has no impact on the Midwest. Under this pattern, showers/storms would occur through the Delta/Gulf States with some areas seeing upwards of 4-6.00″ of rain. Midwest temperatures would be near to above normal with near normal rain into July 10.

• Central US weather is the driving price determinate into July. The June 30 Stocks/Seeding Report will have surprises, but without adverse weather, any bullish surprise will be sold. Amid the coming 10 days of warm/wet weather, a turn to extreme heat is needed to adversely impact corn yield. Soybeans are a crop of August, but the risk of trend line or above yield is rising with favourable weather into mid-July.

• Mixed/low volume is prevalent in Chicago trade at midday with corn the downside leader while the soybean/wheat markets trade either side of unchanged. Traders are looking for a decline in US corn/soy and spring wheat crop conditions this afternoon. Traders will likely buy Chicago going home looking for a turnaround Tuesday bounce. How vigorous a Tuesday bounce occurs could provide some insight as to the health of Chicago heading into the weekend. It feels likely that we will see additional selling pressure in corn and soybeans into the end of the week with wheat trying to forge a seasonal low.

• Chicago brokers estimate that funds have sold 4,700 contracts of corn, 2,100 contracts of soybeans, and 900 contracts of wheat. In the soy products, funds have sold 1,500 contracts of soymeal and 1,200 contracts of soyoil.

• US weekly export inspections for the week ending June 18 were; 51.0 million bu of corn, 9.4 million bu of soybeans and 22.5 million bu of wheat. For their respective crop years to date, the US has shipped out 1,260 million bu of corn (down 381 million or 23%), 52 million bu of wheat (up 4 million or 8%) and 1,340 million bu of soybeans. US crop year soybean exports are up 4 million bu or 0.3%. China shipped out just 2.9 million bu of soybeans last week as they continue to take record tonnages of the 2020 Brazilian harvest.

• Confusion is what China has sown in terms of seeking signed affidavits that grain/soy/meat import cargoes are Covid-19 free. Commercial traders argue that it is humans that spread the virus, not raw materials following 60-72 hours. Yet, China new Covid-19 food safety regulations have not been fully explained. It appears that the meat values are being impacted to a larger extent on China’s CIQ (China Inspection and Quarantine) virus free certification with world grain traders hopeful that this new protocol will be ended. However, if by the end of the week there is not an abandon of China’s Covid-19 certification demand for grains, reality will set in of China’s intent in managing its food imports.

• The Brazilian winter corn harvest surpassed 10% this weekend with reported yields being far better than expected. Mato Grosso corn yields are record large while yield losses are less than expected in Parana and RGDS. There is a better than a 50/50 chance that Brazil will equal or set a new total corn crop estimate this year at 102 million mt or more.

• IA/WI has received needed rainfall this morning with showers ongoing. Rainfall totals of 0.25-1.50″ have helped replenish soil moisture with the system to push eastward into the E Midwest overnight.

• A progressive weather pattern will be maintained across North America over the next 2 weeks (ending July 8). Short waves in a strong NW flowing jet stream look to produce showers/storms every 3-4 days. Rainfall totals with each system are forecast in a range of 0.5-2.00″ with the best chance for heavy rain occurring across IL, IN and OH.

• The 11-15 day forecast calls for a trough to pull over the top of a ridge impacting the Upper and Eastern Midwest between July 3-7. A few warm days will be felt between June 30 and July 3, but no lasting extreme heat is projected. The GFS model continues to outperform the EU model (EU model upgrade due on July 1). The Central US forecast is warm/wet which favours well established Midwest crops.

• Central US weather is the “driver” of price with a warm/dry first 2/3′s of June likely to produce a warm/wet late June and early July. US record large corn yields are produced when an early dry June is followed by a wet late June and early July. Amid favourable Central US weather, any Chicago rallies will be limited with a key USDA June Stocks/Seeding report due in just five trading sessions.

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Weekend summary 19 June 2020

• Choppy with little direction are Chicago values at midday. The elevated prospect of rain for the Plains/Midwest over the next 2 weeks is capping rallies while the uncertainty of the July weather pattern and future US export demand (China) is underpinning breaks. Heading into the weekend, we doubt that the bulls/bears will be able to get a leg up on the other. A mixed to slightly higher close is forecast as wheat tries to forge a seasonal bottom while traders debate the US July weather pattern and 2020 US corn/soybean yields.

• FAS/USDA did not announce any new export sales today. It was rumoured that China secured 2-5 cargoes of US soybeans yesterday, but that buying was not confirmed/or individual exporters did not sell more than 100,000 mt.

• NOAA came out with the monthly weather forecast calling for near to above normal temperatures and near to above normal rainfall. A wet and warm weather pattern during July would prove favourable to 2020 US corn/soybean yield prospects. If the coming wet weather forecasts prove correct, it is temperature that will be the most important driver of yield during corn pollination.

• Chicago traders estimate that funds have bought 3,200 contracts of corn and 1,300 contracts of soymeal, while selling 2,100 contracts of wheat, 2,400 contracts of soyoil and 700 contracts of soybeans. Funds appear to be lacking passion as they edge into larger net short wheat and soymeal positions.

• The USDA Export Sales Report for the week ending June 11 showed net sales of 18.5 million bu of wheat, 14.1 million bu of corn, and 19.8 million bu of soybeans. The corn/soybean sales were for old crop. The US sold 50.8 million bu of US new crop soybeans which were mostly for China, while new crop US corn sales were pitiful at just 4.5 million bu.

• For their respective crop years to date; the US has sold 233 million bu of wheat (equal to last year), 1,633 million bu of corn (down 274 million or 15%), and 1,624 million bu of soybeans (down 118 million or 6%). The soybean sales pace remains disappointing with WASDE to trim its old crop export estimate by another 25 million bu in the July WASDE.

• We continue to hear exporter discussions that China is seeking offers for US soybeans, ethanol and HRW wheat. No new sales have taken place and China will be preparing for the weekend on Friday.

• Egypt’s GASC secured 240,000 mt of July/August wheat with 120,000 mt coming from Russia and 60,000 mt each from Ukraine and Romania. The fob price we hear is pegged at $207/mt.

• A favourable progressive weather pattern will be maintained across North America over the next 2 weeks (ending July 4). This will provide a favourable mixture of rain, sunshine and cool temperatures. The midday rainfall forecast is wetter for the E Midwest which raises confidence in amounts/locations. The 10-day GFS rainfall forecast map offers 1.50-3.50″ of rain with the heaviest totals falling in the E Plains. The E Midwest will receive 10-day rainfall totals of 0.75-2.50″, but the coverage of the rain will be 70%. High temperatures will retreat to seasonal 70′s to 80′s starting on the weekend. The coming rain and cooler temperatures will be favourable for Central US crops.

• Uncertainty and nervousness about the July weather pattern is keeping Chicago prices in a range. The discount of S American corn vs the US Gulf is slowing US corn export demand. Seasonally, the Gulf corn basis peaks in July as farmers shed old crop cash length. Soy futures have a bid of China under the marketplace.

• As reported yesterday, UK wheat import requirements in the coming season look to be increased and global supply dislocation could well be interesting to watch as it will have a direct bearing upon import price levels and thereby import parity pricing levels. With the US wheat harvest under way, and rapidly progressing with favourable weather conditions, prices are coming under pressure. The French soft wheat crop condition is only 56% good/excellent, the lowest since 2011, and with export volumes for the 2019/20 season at a record level of 13.45 million mt we could be looking at a reduction in opening stock levels together with a reduced harvest volume; double whammy! This could herald something of a more bullish picture than we have seen for some while. Added to this, dry soils in Ukraine are pointing towards a reduced wheat crop this coming harvest. Indeed, their economy minister projected the harvest some 5.3 million mt at 23.0 million, and as a result we are starting to see new crop export offers creep higher; is this the sign of things to come?

• It has been a mixed morning of Chicago trade as heavy opening selling in soybeans and soymeal did not uncover follow through. December corn tested Monday’s low with a fund buying 4,900 contracts in a minute bringing values back to unchanged. Wheat prices are lower on the ongoing massive fund selling. Wheat open interest rose 14,000 contracts on Tuesday as funds piled into new net shorts. The wheat selling is against the cash markets which are showing firm or rising cash basis bids. We look for a mixed Chicago close.

• Cash connected sources report that China secured 2-5 cargoes of US soybeans off the PWN for October. There are rumours that China has started asking for price offers US HRW Gulf wheat and US ethanol. We cannot confirm any Chinese of other US ag products, except US soybeans.

• On the international front, Brazil is becoming more aggressive in offering corn while Russian wheat exporters are quietly being given Government annual export tonnage targets for the 2020/21 season. The combined total that Russia is targeting is uncertain, but likely less than 36 million mt that WASDE forecasts.

• Chicago traders estimate that funds have sold 5,100 contracts of wheat and 3,000 contracts of soymeal. On the buy side, funds are buyers of 3,500 contracts of soybeans, 4,200 contracts of corn and 2,300 contracts of soyoil. Funds are aggressively adding to a net short KC wheat futures position.

• S American soyoil basis offers fell 100-150 points on news that Brazil National Oil/Gas and Biofuel’s agency reduced the blending requirements for biodiesel production from 12% to 10%. The reason for the diminished blend rate is due to Covid-19 and its reduced supply. The S American vegoil market took the news as bearish with soy crush operations likely to contract.

• US weekly ethanol production surprisingly fell last week to 247 million gallons of ethanol, a bearish surprise. Last week’s grind consumed 87 million bu of corn. This is well below last week’s WASDE forecast and argues for an additional ethanol demand cut in the in the July WASDE.

• A favourable progressive weather pattern will hold across North America over the next 2 weeks (ending July 3). This will provide a nice mixture of rain, sunshine and cooler temperatures. The midday rainfall forecast is consistent with prior runs and offers high probability of locations/amounts. The 10-day rain forecast offers 1.50-3.50″ of rain for the E Plains/W Midwest. The E Midwest will receive rain totals of 1-2.50″. The coverage of the rain will be high. High temperatures will retreat from the 80′s and mid 90′s to seasonal 70′s to mid 80′s starting on the weekend. The coming rain and cooler temperatures will be ideal for crops.

• The near record corn short has traders nervous about being too bearish until the rain starts to drop across the Plains and the Midwest. The timing of the rain in falling in the last 10 days of June could not be better for soon to reproduce corn. We hold a bearish corn view and view rallies in November soybeans to $9.00 as offering a sales opportunity. Wheat is near seasonal lows as import demand starts to improve.