• Chicago values are mixed at midday with a turnaround Tuesday not finding much new demand. Amid some of the best rainfall potential (2-week Midwest forecast offers 0.75-3.00″) in the past 6 weeks, the bulls are having trouble garnering upside momentum. Much of the morning buying is short covering and the acceptance of windfall profits following 2 days of hefty Chicago losses.

• Mother Nature will hold the deciding voice in Chicago price direction, but the warm/wet Midwest forecast favours corn/soy crops that are reproducing. NASS should find that 50% of the US corn crop will be pollinating through Sunday. This makes the 2-week weather forecast into late July key. We look for a mixed Chicago close in the summer row crops while wheat values rise amid disappointing Black Sea yields and reluctant Black Sea farmer sales.

• Chicago brokers estimate that funds are net buyers of 3,300 contracts of wheat and 3,500 contracts of soybeans, while selling 2,200 contracts of corn. In the soy products, funds have bought 2,900 contracts of soymeal and 3,600 contracts of soyoil. The funds are back to piling into a larger net short corn position while trying to exit a large soybean long. The wheat market is trying to rise above the 200-day moving average that crosses at $5.35 basis September Chicago futures. A close above $5.35 September Chicago wheat would confirm a seasonal low and strongly suggest that wheat is entering a more dynamic bullish price phase.

• FAS reported that China booked another 1,762,000 mt of US new crop corn, the third largest daily US corn sale on record and the biggest 1-day sale to China ever. The USDA also confirmed that 129,000 my of US soybeans were sold for 2020/21. Research estimates that China has now secured some 3.6 million mt (141 million bu) of US corn under Phase One which is split between old/new crop years.

• European sources report that China has also booked 3.0 million mt of Ukraine corn over the past 2 weeks for a combined China purchase total of 6.6 million mt. Under TRQ rules, China must issue annual import licenses for 7.2 million mt of world corn. Most of these licenses are now filled. Note that you cannot import corn into China without a GMO license. US corn futures sold off following a higher opening as traders fear that China may have only 500,000 of open demand. Much of China’s TRQ corn demand is fulfilled. Future China corn buying/imports will require state purchases through COFCO or Sinograin for their own account.

• GASC purchased 114,000 mt of Russian wheat at $226.75 basis C&F for late August shipment. The purchase volume was less than expected which caused US wheat futures to retreat from their highs. GASC has additional late August and September needs and is likely to use any modest world wheat price correction to extend their forward coverage. Russian fob prices keep rising as Russian farmers are enduring less than hoped for yields and are tightfisted with supply.

• NOPA is expected to announce that its June soybean crush rate fell to a 9-month low of 162.2 million bu according to a Reuters News survey. This would be the third straight monthly decline and the smallest monthly crush since September. The weak crush trend is expected to persist through July.

• The midday GFS weather forecast is slightly drier in the Plains and slightly wetter for E IA, IL, IN and KY. A series of storm systems will regularly pull across the Midwest every 2-3 days. Any high-pressure ridging will be elongated across the Delta/Gulf states with a seasonally fast flowing jet stream sinking southward. A more zonal flow looks to be offered beyond the next week with the high-pressure ridge building back west across the Western US. This is a warm/wet profile for the Central US which favours yield.

• If the US corn market can not sustain much of a recovery following the third largest daily corn sale on record, it is a bearish omen. Chicago traders will take up the chore of watching/trading raindrops over the next few weeks as moisture is critical to yield determination. This is the most water sensitive time of the year for corn. World wheat prices are rising which underpins breaks. China has likely secured another 3-5 cargoes of US soybeans today. It is all about Midwest weather into the weekend.

• Chicago futures are lower at midday with corn, soybeans and wheat holding in the red. An early rally in wheat was not sustained with the summer row crops back pulling futures lower. Traders are loath to sell corn and soybeans more aggressively with a broad expectation that US corn/soy crop conditions will decline in the afternoon NASS report. Thereafter, it will be the location and amount of rain that will determine Chicago price action into the end of the week.

• Chicago brokers estimate that funds have sold 5,200 contracts of Chicago wheat, 9,800 contracts of Chicago corn, and 10,300 contracts of soybeans. Funds have also sold 5,700 contracts of soymeal and 3,400 contracts of soyoil. Funds are on the sell side across Chicago with farmers holding fast and not making sales.

• Technically, soybeans have fallen below their 20/50 day moving averages while corn has crossed the 50 day and is back to where the rally started before the June 30 acreage report. The wheat market is holding in a range.

• For the week ending July 9, the US exported 79 million bu of total grain, up 1.7 million bu from the past week, and up 5 million from last year. The US shipped out 35.5 million bu of corn, 17.7 million bu of soybeans, and 22.9 million bu of wheat. The wheat export pace was above trade expectations.

• For their respective crop years to date, the US has exported 1,385 million bu of corn (down 314 million or 22%), 1,391 million bu of soybeans (down 31 million or 2%) and, and 110 million bu of wheat (up 2 million or 2% at this early stage in the crop year). China shipped out last week 5.9 million bu of US soybeans or 33% of the total. The US corn and soybean export pace must pick up for the US to reach the July WASDE annual forecast.

• Brazil has now harvested 35% of their winter corn crop, which is below last year’s pace but will within the cutting pace of the past 5 years. Brazil remains active in selling corn abroad with prices well below the US Gulf. S American corn export prices are likely to steal US corn export demand well into Q4. Both Argentina and Brazil are looking for new feedgrain export opportunities.

• We hear that Ukraine has likely sold China 3 million mt of corn in the past 10 days which when combined with sales from the US under TRQ places the cumulative sales close to 5.0 million mt. This leaves 1-2 million mt of open world corn sales to China, but most exporters do not foresee China taking more than 2.5-3.0 million mt from the US during the 2020/21 crop year.

• World feed wheat sellers are scrambling for supply against rising Black Sea prices and a pure lack of feed wheat export availability. The spread between 11.5% and 12.5% protein wheat (Black Sea) has narrowed to $2-3/my which leaves Black Sea feed wheat shorts with huge losses. The Russian winter wheat crop is of high quality and testing 12-13.5% on their protein scale.

• The midday GFS weather forecast is less hot with a broad area of 1.00-3.00″ of rain covering IA, IL and IN during the remainder of the week. The mean position of the high-pressure ridge elongates and progresses east across the Delta/Gulf States and then retrogrades westward in the 9-15 day period. This produces a favourable NW upper air flow through the Midwest with seasonal temperatures and regular rain chances into July 30. Any real heat occurs from Friday through next Monday with more seasonal temperatures thereafter. Our confidence in the high-pressure ridge positioning being over the Western US during August if rising.

• Crop making rain is offered for the next 2 weeks with extreme heat not lasting. Our view stays bearish on corn/soy with wheat having sporadic rallies due to rising Black Sea prices. Any bounce to open chart gaps in corn/soybeans appear to be a sales opportunity. We would see rallies to $3.40+ December corn and $8.85+ in November soybeans as being solid sales levels. A turnaround Tuesday could offer such an opportunity to sell the gaps left from overnight. We anticipate a 1-2% decline in corn and soybean conditions this afternoon.

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Weekend summary 10 July 2020

• Chicago futures are higher at midday with funds squaring positions ahead of the July USDA Crop report amid a threatening extended range Central US weather forecast. The prospect of another episode of heat/dryness mid to late next week makes the coming next 5 days of rain important to yield. Showers are falling this morning across NW Iowa and through portions of KS/MO at midday.

• Complicating matters is the fact that the forecast models are having trouble identifying convective thunderstorm activity which has produced better than expected rain across the W Midwest/Plains. Chicago will be weather-driven, with Sunday/Monday trade important in determining price action into late July.

• Chicago brokers estimate that funds have bought 5,400 contracts of wheat, 7,500 contracts of corn, and 6,400 contracts of soybeans. In soy products, funds have bought 4,700 contracts of soymeal while selling 3,100 contracts of soyoil.

• US weekly export sales for the week ending July 2 included 12.0 million bu of US wheat, 23.6 million bu of old and 16.1 million bu of new crop corn, and 35 million bu of old and 14.0 million bu of new crop soybeans. The weekly corn and soybean sales were slightly better than expected.

• For their respective crop years to date, the US has sold 278 million bu of wheat (up 2 million from last year or about 1%), 1,689 million bu of corn (down 257 million or 13%), and 1,690 million bu of soybeans (down 93 million or 5%). We look for the USDA to trim their 2019/20 US corn and soybean export estimates slightly in the July WASDE report on Friday.

• Russian wheat prices are rising on the initial disappointing yield trend winter wheat harvest. A deeper expansion into the harvest is needed to determine a true Russian wheat crop size but yield reductions in Ukraine and Russia are pushing end users to expand their forward coverage. Additional yield data points on yield are required to show a full reflection of the 2020 Black Sea and Russian wheat crops. Research looks for the USDA to leave the 2020 Russian wheat crop steady at 77 million mt or maybe trim the crop to 75.0 million. Interior Russian wheat prices are up $5-6/mt for the week.

• Argentine corn for August has slipped to a new low of $0.50/bu below the US Gulf with Brazilian corn following. The Argentines remain aggressive in offering corn to the world feedgrain export arena.

• No new daily sales of US corn, soybeans are wheat were announced this morning. China purchased a few US soybean cargoes early in the week, but they have been slower than expected buyers again this week. As the calendar turns to mid-July China needs to dramatically pick up its US soybean purchase pace.

• The midday GFS weather forecast is further north with rain in the nearby forecast, but cooler/wetter in the extended range (vs the overnight run). High pressure ridging will push a bit deeper into the Central Plains in the next 24 hours and this will act to force the jet stream across the N Plains and Great Lakes. 5-day rainfall of 0.75-1.75″ will impact W IA, MN, WI, WI and northern parts of IL, IN and OH. Areas further south will see limited precipitation but also near-normal temperatures.

• The midday GFS forecast is a bit quicker in forecasting the return of Midwest precipitation and cooler temperatures as it no longer expects the strongest ridging to reach into the heart of the Corn Belt. A pattern of light but daily showers is offered to the N Plains and C and E Midwest July 18-24. Cumulative totals are pegged at 0.25-1.50″. The E Midwest will be favoured.

• Uncertainty over Black Sea production and late July Central US weather will sustain fund short covering/buying in the near-term. Yet, massive downgrades to global end stocks forecasts are needed to prevent a more bearish pattern beyond summer. Work maintains that supply-driven rallies should be rewarded.

• Chicago futures are firm at midday with wheat rising sharply. EU and Black Sea wheat crop estimates this week have been inching lower, and winter yields across key areas of Southern Russia continue to disappoint. EU cash markets have been well supported despite the recent break in Russian fob quotes. Funds this morning were estimated to have been short a net 35,000 contracts in both Chicago and KC. Sep Chicago this morning traded easily through its 20-day moving day average, and short covering is the theme of the morning.

• However, we would mention that already US wheat is overpriced in the world marketplace. EU milling wheat futures are at midday are up just $0.07/bu, and so US wheat premiums to comparable EU/Black Sea origin will be widening.

• FAS failed to include any new US export sales to China or elsewhere this morning. Stepped-up Chinese buying of US soybeans is needed to sustain Nov above $9.00-9.10, while US corn demand increasingly is becoming limited to already captive markets.

• Brazil’s CONAB raised its 2019/20 Brazilian soybean crop estimate to 120.9 million mt, vs. 120.4 million in June. We suspect additional boosts to production will be made amid surprisingly large soybean export demand.

• Recall that the USDA pegs Brazil’s 2019/20 soybean crop at 124 million mt, and in recent months has not opted to follow CONAB’s guidance.

• CONAB lowered its total Brazilian corn crop estimate slightly to 100.6 million mt, vs. 101 million in June. Our view is that final Brazilian corn production will sit between 101-102 million mt, but we do mention yields in Mato Grosso do Sul and Parana have been better than expected. Safrinha yields in Mato Grosso are record large. The pace of Brazilian corn sales is beginning to accelerate.

• This week’s EIA data is viewed as slightly bearish corn in that ethanol production gains have been limited in recent weeks while ethanol stocks were higher for the first time since mid-April. Ethanol production through the week ending July 3 totaled 269 million gallons, up 4 million on the previous but well short of the 296 million gallons average needed to hit the USDA’s target. US gasoline use through the week totalled 8.77 million barrels/day, up 2% on the previous week but still down 10% from the same week a year ago. US crude stocks last Friday were a massive 539 million barrels, up 17% on the year.

• The midday GFS weather forecast is consistent with this morning’s solution. Showers will be widespread across the Northern Plains and Central Midwest into Mon/Tues. Cumulative totals of 0.50-1.00″ are offered to the Dakotas, MN, WI, northern IL, IN, OH and Ml. Temperatures into the weekend will moderate somewhat, with highs to be capped in the upper 80s and low 90s across the primary Corn Belt.

• Strong high-pressure ridging expands and reaches into the Midwest July 16-19. This will allow temperatures during this period to rise into the low/mid-90s. But the ridge will stay transitory in nature, with cooler temperatures and better rain chances projected in the 12-15 day period.

• US and world wheat markets are adding premium on lower than expected early EU/Black Sea winter yield results. Price action is validating that seasonal lows in wheat were scored earlier than normal. Corn/soy rallies will be laboured without lasting heat/dryness in the second half of July. Demand growth remains a concern.

• Chicago futures are mixed at midday with wheat firmer while corn/soybean futures trade either side of unchanged amid the ongoing debate over Central US weather. As has been the trend for weeks, the EU weather model has less rain than either the GFS, Canadian or the Ensemble models of the US or Canadian output. The EU model used to be the most accurate on rainfall, but since there have been updates, the model appears to be too dry as it misses convective shower activity, which is a large part of Central US rainfall during summer. On the other hand, the GFS forecast has returned wet for the Central US with any high pressure ridging to hold across the SW US for most of the next 70 days. The 11-15 day outlook remains difficult with any forecast being low confidence.

• FAS did not announce any new sales this morning to China or others. What has been absent so far this summer is sales to nations other than China. Covid-19 appears to have a negative impact on world grain trade. USDA is likely to cut its 2019/20 world corn export outlook by at least 6 million mt with the new crop wheat export campaign starting out slowly. Black Sea wheat vessels loading are well down from July last year amid the sharp fall in tourism and foodservice demand. The old crop corn export forecast will likely curtail 2020/21 world corn trade. The US market lacks a demand driver to push grain/soy upwards.

• Chicago brokers estimate that funds have bought 3,500 contracts of corn, 4,400 contracts of soybeans, and 4,200 contracts of Chicago wheat. In the products, funds have bought 1,200 contracts of soymeal and 2,700 contracts of soyoil. Funds were net buyers of the break awaiting the midday weather update.

• Private Russian wheat production estimates are retreating with most now seeing the 2020 crop in a range of 76-78 million mt based on early harvest data. Such a crop is above last year which would allow Russia to export 34-36 million mt of wheat. WASDE did not raise their 2020 wheat crop estimate in June and its forecast of 77 million mt now appears close to correct. We would reiterate that Russian exporters will try to push out as much wheat as possible until an export quota system is put in place during October.

• The world’s major ag currencies are generally weak vs the US$ with limited rally potential nearby. The Russian Ruble is priced at 71:1 US$, the Argentine Peso at 70.8:1, the Ukraine Hryvnia at 27:1 and the Brazilian Real at 5.32:1. The weakness of non-US ag currencies limits US export opportunities longer term amid overseas production expansion. Argentina is offering fob corn for August/September at $0.46/bu below the US Gulf while US wheat is $0.49-0.59/bu above Black Sea offers. US soybeans are competitive until late January when Brazilian offers are $0.55/bu cheaper. Like last summer, the US export opportunities are in decline in a supply driven US weather market.

• GASC tender results are awaited with it likely to be filled by Russian wheat. We await an announcement.

• The midday GFS weather forecast is like the overnight run and less threatening. The GFS retrogrades the high-pressure ridge west and south to a position over the SW US late week. The ridge in this position allows ridge-riding Midwest rain chances through Monday. None of the rains are heavy, but cumulative totals look to add up to 0.35-1.50″ over the next 6 days. Temperatures cool from the mid-90′s to more normal 80′s to lower 90′s.

• A new storm system is noted for next Tuesday which pulls through the N Plains and the W Midwest. This system produces additional showers/storms of 0.2-0.9″.

• The high-pressure ridge holds across the SW US through July 15 before elongating across the South Central US under humid weather conditions. Rains will ride the northern end of the ridge in crop areas from IA into OH.

• Option volatility is being extracted today, but Friday’s WASDE report and Central US weather will combine for considerable market risk. This is not a classic weather pattern set up for a dire Central US drought. Midwest rains will occur regularly with near to above normal temperatures. The jet stream is migrating back southward to a more normal position. Any acute/lasting dryness will be across the S Plains. Crops will be well watered across most of the Midwest/Delta into July 20.

• Chicago futures are mixed at midday with wheat lower while the summer row crops add weather premium to price. The morning rally has been on diminished volume as neither the bulls or bears are willing to push their case too hard with cooler temperatures and some rain across the Midwest from Wednesday through the weekend. A front pushes through the Midwest/Delta late week cooling things off and also producing widely scattered showers. Traders understand that the models have difficulty getting locations and amounts right with convective shower activity. No trader wants to caught buying the bulge ahead of green blobs on the radar screen. We look for a mixed close with soybeans the upside leader. The forecasts are not wet enough for the bears or hot enough for the bulls.

• Chicago brokers estimate that funds have bought; 5,100 contracts of corn, 3,600 contracts of soybeans while being flat in wheat. Funds have secured 4,400 contracts of soyoil and 2,100 contracts of soymeal.

• China was confirmed to have bought 264,000 mt of old crop soybeans and 202,000 mt of US new crop corn. We hear that 2-3 cargoes of US soybeans have sold off the PNW for September/October this morning.

• A host of Executive Orders and Congressional Bills sit on US President Trump’s desk to sign against China’s aggression via Hong Kong. Traders worry that China could somehow retaliate against the US’s meddling which would further raise US/Chinese political tensions. 40 US trade groups in a letter to Sec of Treasury Mnuchin pushing him to get China to secure more energy and ag goods in coming weeks. US exporters report that China is securing US ag goods, but not at a pace that will allow them to reach their Phase One Commitment.

• The US FAS Weekly Export Inspection report has been delayed for technical difficulties and will be released later this afternoon.

• Brazilian farmers have completed 25% of their winter corn harvest with yield trends holding well above expectations. The high yields have traders discussing a total Brazilian corn crop of 104-108 million mt. Most expect that CONAB and USDA will be raising their Brazilian corn crop estimates in the months ahead. Brazil is likely to export record tonnages of corn of 38-40 million mt.

• Russian interior wheat/flour prices are in sharp decline as the 2020 winter wheat crop harvest gains speed. So far, yields have been below producer expectations which has renewed talk of a Russian 2020 all wheat harvest of 75-78 million mt. Russian exporters can now secure wheat in the interior at prices below fob export values. However, the ship line-up for export remains dismal with just 2 boats loading this week. Russian wheat prices will not seasonally bottom until there is a noticeable rise in export sales/loadings.

• The midday GFS weather forecast is slightly wetter and less threatening with a high-pressure ridge during the 10-15 day period. Midwest storm activity will be featured daily into next Tuesday. The best rain chance is late week with a frontal pass across the Midwest. A rich source of gulf moisture along with afternoon heating will produce showers/storms including “Ridge Riding” rains. None of the rains are projected to be heavy, but daily amounts could add up to 0.35-1.25″.

• The mean position of the ridge has shifted west, a trend that we think will be furthered in coming runs. The best nearby rain chances will be across the N Plains and the W/N Midwest, with reduced totals in the SW Midwest/Plains. The 10-15 day period has a less amplified ridge that is further west compared to the overnight run. A ridge west/trough east pattern favours Midwest rain.

• It is a game of weather musical chairs in Chicago. The outlook for US grain demand is dismal with export sales in retreat amid cheaper fob offers from others. US corn ethanol producers are back to break even margins, while US livestock farmers struggle with negative feed margins. The point is that the Chicago rally is supply driven via adverse weather. If the US weather pattern improves, there won’t be enough chairs for the bulls to sit down on.

• Chicago futures are lower at midday on less threatening Central US weather and profit taking following several days of fund short covering gains. Other than short funds, end users nor exporters are willing to chase the Chicago rally with crops growing and improving in the fields. We look for Monday’s NASS Crop Condition and Progress report to reflect steady to a 2% improvement in good/excellent corn and soybean ratings. As of today, summer row crop yield potential is high with above trend line corn/soybean yields forecast.

• FAS/USDA confirmed that China booked 126,000 mt of US 2020/21 soybeans and 202,000 mt of corn. The sales were said to have been made late last week and announced today. It was hoped that China would be buying 1.5-1.7 million mt of US soybeans per week. Markets are disappointed by China’s purchases of US crops to date. However, there remains time for China to pick up the pace heading into the end of the year to reach Phase One targets.

• Russian, European and Ukraine Black Sea ports are witnessing a sharp reduction in vessels arriving/loading in July. The trend could be related to Covid-19 demand destruction or that French/Russian and Ukraine farmers are being tight fisted with their new crop harvest. We will follow the vessel loadings, but a just a year ago, Russia exported 8 million mt of wheat in July/August which is unlikely to be achieved this season. There is no doubt that there is a drag in world wheat and corn demand during July amid the Covid-19 and economic uncertainty.

• The midday GFS weather forecast is wetter with convective storm activity on almost a daily basis after the long holiday weekend. A rich source of gulf moisture along with afternoon heating will produce showers/storms. None of the rains are projected to be heavy, but over the next 10 days could add up to 0.3-1.25″ helping to maintain high corn/soybean condition ratings.

• Also, the mean position of the ridge has shifted west, a trend that we think will be furthered in coming model runs. The best rain chances will be across the N Plains and the W/N Midwest, with reduced totals in the E Midwest.

• High temperatures will range from the mid 80′s to the mid 90′s from Sunday into Thursday before retreating by 4-7 degrees. A decline in temperatures will allow rain chances to increase. The 11-15 day forecast starts with a Plains ridge, but ends with its compression southward and cooler temperatures/increasing rain chances.

• An acute focus on Central US weather will direct Chicago prices in coming weeks. Today’s midday forecast is more hopeful for Midwest rainfall next week. This is not a set up for a lasting period of extreme Midwest heat/dryness. More likely is warmer than normal temperatures and at least near normal rain that would allow crops to hold their high yield potential into the autumn. Our expectations for 2020 US corn and soybean yields are near to above trendline.

• Chicago futures are deeply in the green on Wednesday as funds are aggressively add to their soybean long and exit their corn short. December corn rallied above a key downtrend line that crosses at $3.56-3.57 which fuelled additional chart-based buying. Chicago corn, soybean and wheat all hold a strong tone in midday trade with corn the upside leader on fund short covering. A higher close is expected if the midday weather models follow their overnight trends.

• The US farmer has been a big seller of old crop corn stocks this morning with Midwest elevators reporting their best movement of the year, US farmers were hoping that July corn would reach $3.45-3.55 and sold aggressively this morning. Cash sales of old crop soybeans has been much more limited with farmers having sold most of their stored supply already. Midwest farmers are targeting some clean up sales at $9.00 or above basis July futures.

• Chicago brokers estimate that funds have bought 28-32,000 contracts of corn, 9-10,000 contracts of soybeans, and 2,200 contracts of wheat. In the products, funds have bought 5,500 contracts of soymeal and 2,100 contracts of soyoil.

• Research estimates that funds could be nearing a net 200,000 contracts net short corn position by the close today with their soybean long close to 56,000 contracts. Funds hold a sizeable net short in Chicago wheat.

• The reason for actively updating fund positioning is that end users/importers are unwilling to chase corn/soy values higher. They know that harvest is ahead and see no reason to panic and make purchases on the speculative bulge. Thus, when the funds have cut their net short corn position down to 50-100,000 contracts, the Chicago rally will be nearly completed.

• The EIA reported that the US consumed 265 million gallons of ethanol for the week, up 2 million gallons from last week, but well below the 295 million gallons that is required to meet the USDA annual forecast. The downturn in US gasoline consumption was a surprise last week and offers confirmation that the new spikes in Covid-19 cases had an adverse impact on US miles driven. The Chicago corn rally has pushed US ethanol margins to even or slightly red levels. A continued rally in Chicago corn futures would further slow the grind.

• The midday GFS weather forecast is cooler in the next 5-6 days with Midwest high temperatures in the upper 70′s to the lower 90′s with 80′s to upper 90′s in the Plains. Any showers will be finishing today with general dryness over the fat areas of the Plains and Midwest into early next week. A high-pressure ridge will act to limit rainfall with the next chance being across the Northern Plains and the Upper Midwest.

• A 5.94 milibar ridge sets up across the Plains/Midwest from Friday July 10 and lasts into Monday July 13 producing upper 80′s to upper 90′s high temperatures. This is the warmest period of the forecast with a cool front to produce showers/storms into mid-July. A more normal Central US weather pattern is offered as the blocking over Europe ends. We doubt that the Central US is facing a lasting/devastating drought.

• Fund short covering in corn is likely to persist into the US holiday weekend. A 50% of the December corn decline is $3.63 with the next upside target being $3.70-3.74. November soybeans upside targets is at $9.03-9.12 while Sept Chicago wheat stalls against $5.00-5.05. A few warm/hot and dry days are a concern, but we do not see a lasting dire Midwest drought.