• Stratégie Grains have cut French soft wheat output by 2 million mt to 36.5 million mt on account of damage caused to the crop by persistent rainfall.

• The Russian AgMin reports their wheat harvest to be well under way with over 4 million mt already gathered and yields looking promising at 4.45 mt/ha, up from last year’s 3.74 mt/ha. IKAR (the Russian consultancy, Institute for Agricultural Market Studies) forecasts the crop to be 65-66 million mt, up from 61 million mt last year.

• AgroConsult also report the Ukraine harvest to be under way again with improved early yields at 3.75 mt/ha, up from 3.2 mt/ha last season. They forecast the crop at 23.3 to 24.2 million mt, a drop from last year’s 26.5 million mt.

• Today has seen Chicago markets lower with soybeans pacing the decline and grains following. Rain across IL and bearish technical indicators are giving the funds second thoughts about holding on to their large (and largely stale) long positions. Selling has seen corn at fresh lows although wheat was holding yesterday’s lows. Soybeans have shed $1/bu in a few short sessions and funds are quoting “blood on the streets” as large margin calls are made. There will likely be a bounce, but this will only come when the funds have done eating their long and wrong positions, maybe at the end of the week or early next week.

• Early EU wheat and barley yields have failed to impress, falling below producer expectations, as excess rainfall has caused poor grain fill and test weights. Nitrogen leaching from soils has been suggested to be a cause leaving crops searching for nutrients. The barley harvest is well underway across France and early yields are down 6-15%. Barley yields are often is a good barometer for wheat, and the trade is braced for a smaller and low quality crop harvest. Wheat cutting will get underway in earnest next week and a better assessment of the French and S German crop will then be offered. As of today, disappointment is the word that comes up repeatedly when talking to European farmers.

• FOB premiums for corn keep rising as Chicago corn declines. September US corn fob is offered at $1.00 over, but Brazil corn in that same position is offered at $1.15 over or $180/mt. One would have expected that with the Safrihina corn harvest reaching 25% that there would be cash pressure on Brazilian corn export offers. However, no such pressure is being witnessed, and this has some speculating that the Brazilian corn crop could be well under USDA and/or private estimates or that the refilling of the pipeline is much more robust. Ukraine fob corn offered for October is now $.50/bu cheaper than Brazilian fob offers. The reduced Brazilian corn export program could push additional demand back to the US or Ukraine into early 2017.

• The funds are exiting their long positions as the soybean complex has fallen below key moving averages and their losses in corn have become sizeable! However, its only July 6th and sub $3.30 spot corn, or sub $4.00 spot Chicago wheat is just too cheap for what is currently fundamentally known. Moreover, we suspect that China is just waiting to pounce on the soybean market when there are signs of a bottom. China has a huge amount of cash soybeans yet to secure from September forward with spot crush margins now at their best levels since mid 2014. Consequently, we currently struggle to become significantly bearish soybeans with huge cash demand in the offing.

• US ethanol margins have soared on this price break with corn prices dropping nearly $1.00/bu in just the past two weeks. Near normal Central US weather and sticky cash ethanol prices have supported the big surge. Look for US ethanol plants to ramp up production amid $1/gallon margins. US corn yields have yet to be determined, but strong ethanol and livestock margins are likely to place a bid under spot corn prices.

• Soybeans and meal keyed off of a deep break in Chinese meal prices overnight and gapped lower at Tuesday’s open. The sharply lower open was followed by technical selling/liquidation that had both beans and meal trading to limit losses. After the close, the Crop Progress report showed that 70% of the US soybean crop was rated as either good or excellent, down from 72% last week, but still well over last year’s 63%. Overall, crop ratings declined in 8 states, increased in 5 states, and were unchanged in 5 states. The best rated soybeans in the country are found in WI and the lowest are in MO and AR, but as a whole, the US soybean crop is still the 6th best rated crop on record, and assuming minimal changes over the next three weeks, yield models shows an August yield of 48 bushels/acre. November soybeans are back testing the May high, and our outlook has turned neutral on this break. Chinese soybean demand has been unrelenting, and US export demand will be strong in the coming months.

• Corn futures fell sharply, though ended well above session lows, amid weekend precip across the Southern Corn Belt, coming rainfall across Northern areas, and as competing grain prices in Europe and the Black Sea remain weak. Black Sea feed wheat offers have fallen to $157-159/mt for Aug/Sep, which is comparable to $3.10, basis Sep Chicago futures. A more neutral short term outlook is advised as US weather takes on much more importance during pollination, but we would be willing sellers of 20-30 cent rallies. The world is awash in grain. US crop conditions as of Sunday were unchanged at 75% good/excellent, vs. 69% a year ago. Declines are noted in MI, ND and SD; improvement is noted in CO, KS, KY, MO and OH. Rainfall of .50-2.00” into Thurs/Fri is likely to elevate ratings across the N half of the Corn Belt, and work still suggests a final yield of 168-173 bushels/acre. 15% of the crop is silking, and so weather in the next 10-12 days will have huge importance in determining yield, particularly temperatures. There is no threat currently, but the market will be especially sensitive to changes from weather run to weather run this week. Dec corn has reached our initial downside target of $3.50. Confirmation of above-trend US yield is needed to propel the market downwards. Rallies, however, will further curtail export potential. CBOT futures look to trade in a range from $3.40-3.80 into late month.

• US wheat futures rallied 3-8 cents, with spring contracts pacing the advance. It is estimated that funds in Chicago this Tuesday were short a net 120,000 contracts, the largest short position since April, and some measure of profit taking can be expected at or near contract lows. Russian cash prices fell another $1/mt for Aug-Sep delivery, with offers there comparable to $3.90, basis Sep Chicago. Russian crop estimates have centered on 65-67 million mt, a new record and compared to the USDA’s 64. We note that domestic prices in S Russia are beginning to collapse as harvest expands, and we reiterate that a lasting bottom on global market isn’t expected until early Aug. A slow grind lower in global cash grain prices is expected in the weeks ahead, and the US will have to follow to maintain market share. Russian cash prices will remain the market’s primary driver. US spring wheat crop conditions are unchanged at 72% good/excellent, right at average and vs. 70% a year ago. The spring crop is 74% headed (vs. 45% last year). Winter wheat is 58% harvested nationally, including 79% in KS. The wheat market lacks bullish fuel, though a more neutral outlook is forecast beyond the next 2-3 weeks.

• Early Chicago markets saw a red and almost bloody start to the holiday shortened week with corn, soybeans and wheat all falling to sharp losses. Improved central US weather has been the trigger as wheat slumped to decade lows and corn hitting lows not seen since harvest 2014. Midday saw selling pressure ease but it could return into the close if the funds decide to follow through.

• Limit down soybean meal has pressured Chicago soybeans while the grains are seeing consumptive feed demand on acute weakness. We have to turn a touch more more bullish soybeans on this break while we are starting to reduce our bearishness in the grains. Corn and wheat prices have nearly reached our downside price targets. A recovery into late week is expected to be led by soybeans and meal.

Our weekly fund position charts can be downloaded by clicking on the link below:

Fund positions

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June 16 Stocks Report

• The USDA has today released its weekly export figures as detailed below:

Wheat: 645,400 mt, which is above estimates of 300,000-600,000 mt.
Corn: 1,004,600 mt, which is within estimates of 1,000,000-1,450,000 mt.
Soybeans: 1,528,000 mt, which is within estimates of 1,100,000-1,600,000 mt.
Soybean Meal: 159,700 mt, which is within estimates of 100,000-275,000 mt.
Soybean Oil: 62,400 mt, which is within estimates of 40,000-70,000 mt.

• Brussels has issued weekly wheat export certificates totalling 503,710 mt, which brings the season total to 32,94 million mt. This is 86,974 mt (0.26%) ahead of last year.

• USDA acreage and quarterly stocks data released today was reported as follows:

US all wheat area: 50.816 million acres, above estimates of 49.869, up from 49.559 last quarter and down from 54.644 year on year.
US corn area: 94.148 million acres, above estimates of 92.896, up from 93.601 last quarter and up from 87.999 year on year.
US soybean area: 83.688 million acres, below estimates of 83.834, up from 82.236 last quarter and up from 82.650 year on year.
US wheat quarterly stocks: 981 million bu, just below estimates of 982 million bu, down from 1.372 billion bu last quarter and up from 752 million bu year on year.
US corn quarterly stocks: 4.722 billion bu, above estimates of 4.528 billion bu, down from 7.808 billion bu last quarter and up from 4.453 billion bu year on year.
US soybean quarterly stocks: 870 million bu, above estimates of 829 million bu, down from 1.531 billion bu last quarter and up from 627 million bu year on year.

• The June report held a few varied surprises such as larger than expected US corn stocks, larger than expected US corn seeding, and a soybean seeding number that did not change the bullish outlook for this market. The soybean/corn ratio pushed out to an historic high of 3.1:1 and the ratio promises to rise even more in the trading days ahead. It appears that the report is bullish soybeans, neutral to bearish wheat, and bearish corn. We expect that the strong soybean market will drag the grains upwards on short covering into the weekend. US soybean futures could score new rally highs. NASS estimated that US corn area expanded to 94.1 Mil acres, up 7% from 2015, and the third largest US corn area since 1944. The US farmer did not shift acres away from corn to soybeans according to the report, US farmers continue to favour the higher yielding corn crop. With a trendline yield of 168.6 bushels/acre, the US will produce a corn crop of 14.6 billion bu. This will push US 2016/17 corn end stocks above 2,300 million bu. US soybean plantings were forecast by NASS at a record high 83.7 million acres, which is up 1% from last year with record high plantings recorded in; MI, MN, NY, ND, OH, PA, WI.

• Total principle US seeded crops expanded to 323.427 million acres, with expansion across all areas of the Central US, except the Plains and MS. Combined US corn and soybean acres rose 7.187 million acres! The biggest falls in US acres occurred in all wheat at minus 2.923 million acres and sorghum at minus 1.234 million acres. The real surprise was the rise in US hay acres at 1,690 million acres. The rise in US hay acres is likely to keep pressure on US forage prices well into mid 2017. US corn stocks at 4.722 billion bu were 269 million bu larger than last year, up 6%. Much of the corn stocks were held off farm which was up 9% from the prior year with commercial stocks up 3% at 2.25 billion bu. US farmers still have a sizeable cash corn position to sell before the new crop harvest. It is estimated that third quarter corn feed/residual is 992 million bu, which will be down 124 million bu. The US third quarter soybean residual was pegged at minus 80 million bu, double the rate of the past crop year. US June 1st soybean stocks at 870 million bu were up 243 million bu from last year. The larger stocks will help buffer the large export demand that appears forthcoming in August and September. US June 1st wheat stocks at 981 million bu were right at trade estimates and will represent 2015/16 final supplies. 4th quarter US wheat use was projected at 391 million bu or up just 1% from the year prior.

• Based upon strong export demand for US soybeans, the 2016/17 balance sheet will remain tight. We expect that November soybeans could push to new rally highs with potential to $13.00. On the other side is the oversupplied grain market with corn and wheat prices to try to follow the complex, but without adverse weather, December corn could reach $3.20-3.40 with July Chicago wheat reaching our long held downside price target of $4.00-4.25. The soybean market reconfirmed bullish price trends with US seeded acres that did not exceed 84 million. The bearish surprise was corn via both stocks/seeding with US 2016 corn plantings at their third largest level since 1944. The soy/corn ratio could rise to a record 3.5-3.7:1 as the market tries to buy additional 2017 S American soybean acres.

• Caution ahead of the June Stocks and Seedings report, which will be released Thursday, was always likely to be the case, key is US seeding estimates. The average trade estimate is for 2016 US soybean acres is 83.8 million acres which would be a gain of 1.6 million acres from March, while US corn acres slide 700,000 acres to 92.9 million acres. US spring wheat acres are expected to rise 366,000  to 11.7 million acres. Combining corn, soybean, and all wheat, US June 1st crop seeding is expected to rise just 1.17 million acres from March, which we believe is too little when one considers that farm profitability rose by its 2nd largest total on record during the period. We would expect that total US major crop acres will rise at least 3 million acres with the potential for as much as a 4.5 million acre increase. In 2009, the last time that on farm profitability this much, farmers responded and seeded additional acres which produced a bearish June report. In our  view, the trade is underestimating the amount of US crops that were planted, potentially by a significant amount.

• Unlike the EU model, the midday GFS weather is much cooler for corn pollination following a brief warmup on July 6/7. A strong push of Canadian air would limit any stress on corn with near to above normal rains. The forecast leans bearish on prices with the chant of record US corn yield potential becoming louder. There appears no evidence of any US pattern stagnation into mid July with a replication of the 1983, 1988 and 2012 droughts off the table as 2016 US weather patterns unfold. As such there is no evidence of a dire Midwest drought pattern into mid July, and although there will be a few warm to hot days next week, the big rains that will fall before the heat will limit any crop stress. We lean bearish grain!

• It was a quieter day of trade in the Chicago soybean complex with markets ending mixed. Soybeans ended moderately weaker, while the meal market pushed to new weekly highs. Bean oil slipped to a 2-3 month lows, while crush spreads jumped up as much as 13 cents in July and 6-9 cents/bu in other months. Quiet overnight trade is likely, with a strong market reaction expected at the midday USDA report release. The soybean acreage number looks to be the most important statistic on the need to replace short S American bushels. We would not be surprised if the spring soybean price rally encouraged as much as an additional 2 million soybean acres.

• The global wheat balance sheet continues to loosen, cash wheat prices continue to fall, and the weather models are lacking yield threats through the next two weeks. In fact, the details of the 7 day forecast have trended wetter, and a general Ridge/Trough pattern through mid-July will promote additional rain chances over the next two weeks. Corn pollination will be widespread by July 10th. With US cash wheat prices at multi-year lows, and with Black Sea feed wheat falling another $2/mt today, a demand story remains lacking. Consequently, rallies hinge upon supply loss, and the recent change in the forecast will push any real threats into the second half of July. Assuming weather conditions are unchanged in the next 4 to 5 weeks, one can reasonably expect an August yield estimate from NASS just above 170 bushels/acre. The point is that the USDA’s end stocks estimate of 2.0 billion bu appears accurate without damaging weather in July, and research continues to suggest prices of $3.20-3.50, basis December futures at harvest time. June 1 stocks will doubtless trigger market excitement on Thursday and, unlike beans, price won’t be as sensitive to yield changes amid current crop conditions and deteriorating export demand potential.

• US and world wheat prices fell again, with July Kansas futures settling below $4.00 for the first time since 2006, and yet Gulf HRW maintains a premium to comparable Russian origin into August. Feed lots are reportedly increasing the inclusion of wheat into feed rations, but there’s still no sign of a lasting bottom. Tunisia secured optional origin wheat for Aug/Sep at a fob price of roughly $160/mt, which is a new multi-year low in the global market. This shook quoted offers from Europe and the Black Sea, with Russian origin falling to $174/mt and French dropping to $176-179. These compare to Gulf offers this evening of $185-187, and non-traditional US export demand is unlikely to be found near term. One noted commentator described the tender price as  “shockingly cheap”. The market is working to clear what’s become a massive surplus, which will take time. Stats Can cut Canadian acres modestly, but this will be more than offset by higher yield. A lasting price bottom is on the horizon, but isn’t expected until late Jul/Aug, when more is known about N Hemisphere quality. A sell-the-rally mentality will remain intact through the foreseeable future.

• Other notable items include the latest estimate for Romanian wheat output to reach a record 8.28 million mt on the back of favourable weather; whilst in isolation not a market changer, it is the “knock-on” effect upon neighbouring regions and their output that is relevant.

• Soybeans and meal futures were up sharply in the overnight as Chinese soymeal surged higher on huge volume. Gains in US markets were pared back through the day on profit taking and wetter midday weather forecasts. Ahead of Thursday’s USDA report, the average trade estimate calls for a soybean acreage total of 83.8 million acres versus March intentions of 82.2 million. The average estimate for June 1st soybean stocks is 829 million bushels. Residual is the most difficult line item in the balance sheet to estimate, and the average estimate implies a quarterly residual of -40 million bu (negative). The average estimate appears inline with the historical trend. Strong Chinese meal demand and late season US export demand have been the key drivers of US soybean prices. US Aug/Sep exports will likely be record large, and a sharp jump in acreage is needed to confirm a top in US soy prices.

• Chicago corn futures settled unchanged for a second consecutive session. Early support was noted from a turnaround in a host of markets (the US$ fell, crude and equities rallied), but Central US drought development is still unlikely through the first half of July. Global milling wheat prices also continue to fall, and new corn US corn demand is being slowed, not accelerated. Midday highlighted how the major weather models are having difficulty with 10-day forecast amid a rather fast moving jet stream. Nearby, there’s agreement on soaking rain across the S and W Corn Belt, which will be a net benefit to national yield. There is currently limited confidence on next week’s pattern, but we should be mindful that there is potential for widespread heat. Near term direction will still largely be a function of daily weather updates, and unlike recent years, the market is not likely to pivot one way or the other on the critical July 4th holiday. Gulf corn’s premium to Black Sea feed wheat remains $20+/mt, and there’s substantial downside risk if weather in the next 3 to 4 weeks is non-threatening. Ample wheat supplies offsetting yield concerns looks likely to limit upside potential.

• US and world wheat markets continue to drift lower, and fundamental input is more of the same. There’s talk that Canadian crop conditions are on par with 2013 (when yield was a record) and EU and Black Sea cash prices fell another $1/mt, keeping US Gulf premiums to other origins at $5-15/mt into September. As a result, US wheat export sales will slow over the next several weeks. The US forecast is wet across E CO, KS and parts of NE through the next 3 to 4 days. Cumulative rainfall of 1-3” (heavier totals should be only regional in nature) will disrupt harvest progress. A drier pattern resumes next week and KS’s harvest is noticeably ahead of schedule. Elsewhere, conditions remain favourable. Only light or scattered precipitation is projected across W and C Europe through the next 10 days. Russia will be mostly dry. Harvest has started there and should accelerate throughout July. The Canadian vegetation maps continue to suggest well above trend yield potential, the USDA’s current yield forecast in Canada is 3.02 mt/ha, some 15% shy of the record scored in 2013. Ultimately, price needs to find a level that clears the market of excess supply, and we doubt a lasting bottom has been scored. The difficulty moving forward is that, amid currency weakness, there’s still incentive to maintain or boost acreage across the Black Sea, Canada, Australia and Argentina. Even in the US, deferred premiums keep potential new crop revenue above spot prices. Funds are short an estimated 105,000 contracts, and a short term bounce may lie in the offing but lasting rallies are not expected into late 2016.

• Soybeans traded higher overnight, and extended gains through the day on technical buying and new export demand the product markets also both saw good gains. Ahead of the morning open, the USDA’s daily export reporting system showed sales announcements of 132,000 mt of old crop soybeans and 18,000 mt of new crop that were sold to an unknown destination. The sales announcement lifted soybeans at the morning open, and kept prices up through the day. The Crop Progress Report (above) showed an expected, but modest decline in national crop ratings. 72% of the US crop was rated as good/excellent vs. 73% last week. IN and OH crops improved on better rains, while conditions in IA and IL turned down as crops in the Southern and Western parts of each state need rain. Despite the decline, the overall condition of the US crop is still one of the best on record. Ahead of Thursday’s reports, we expect profit taking on further strength, with the market to then trade off the report numbers. Like last year, the acreage figure will likely be more important than stocks.

• Support was noted early, but the GFS, EU and Canadian weather models added rainfall to the Midwest next week and beyond. Wheat’s discount to corn also continues to narrow, cutting off potential export demand, and crop conditions remain rather lofty. As of Sunday, 75% of the crop was rated as good/excellent, unchanged on the week and compared to 68% a year ago. Rating declines are noted in IL, MO, ND and TN; improvement is noted in IN, MN and OH, and all states report good/excellent above 63%. It’s tough to find a major argument against the USDA’s national yield (168 bushels/acre), and some yield models indicates a potential range of 168-172. July weather is key, but we’ve highlighted that overall US pattern is not indicative of drought expanding in the next two weeks. In fact, abnormal dryness should ease across MO and Delta/Southeast this week. The crop is 6% silking nationally, including 14% in ND. Cash wheat prices across the W Plains are now quoted up to $.30/bu below corn. Black Sea feed wheat is offered today at $164/mt, down $10 from last week and compared to US Gulf corn $185. The wheat market’s need to clear burdensome supplies will weigh on US and global corn demand in 2016/17. At this time we do not expect to see weather driven rallies sustained.

• The lingering effect of Brexit continues to impact world currencies, and as such EU, Black Sea and US markets begin the week lower, and despite higher projected consumption, Black Sea feed wheat has fallen $10/mt from a week ago, and increasingly it appears the wheat needs to find a level that clears the market of excess supply. US spring wheat good/excellent ratings fell to 72%, vs. 76% last week and unchanged on last year. Winter wheat conditions were boosted 1% to 62%. Harvest progress through Sunday reached 45% complete, vs. 41% last year. The market, KC especially, has reached its initial downside target, though US wheat still isn’t cheap in the world market. EU/Black Sea markets have turned lower ahead of harvest, and in our opinion, additional price downside remains. Quality will be debated throughout harvest, but overwhelming quantities will weigh on grain markets until the next weather threat emerges. Note the normal precipitation is offered to Volga & Siberian Russia (spring wheat) through mid-July. La Niña will be established in some capacity by late summer, which will keep Australian crops well watered. Short covering rallies initiated by fund buying appear unsustainable at this time, and we do not see a longer term bottom until late Jul/Aug.

• Chicago soybean markets were lower overnight and liquidation continued through the day. Fundamental news flow leaned supportive on fresh export demand, though the markets followed the rest of the financial markets lower.   Market focus next week will be on the USDA reports, with initial support noted at the 50-day moving average, near $10.60. US old crop soybean demand remains solid.

• Corn fell, as expected, following Britain’s vote to exit the EU. Some buying was noted towards the close, but US weather and falling non-US grain prices still lean bearish. Unlike a week ago, US forecasts into the first week of July look rather cool/wet, and though crop conditions are likely to fall modestly on Monday, improvement is expected thereafter. Above trend potential remains intact. Recall that weather in July is vastly more important than conditions in June, and the market will continue to ebb and flow on daily weather model releases. Yield models will maintain elevated potential (168-170) through the weeks ahead, should the forecast verify, but the point is that, despite the recent break, volatility will continue over the next 2-3 weeks. Temperatures will be key. Longer term research continues to centre on demand. Even at $3.85/bu, basis spot, US corn is still expensive relative to global feed/milling wheat, as well as Argentine corn, which should continue to fall as harvest expands in July. Gulf corn is one of the more expensive grains in the world currently and weather based rallies will only further ration export demand. Additional downside risk exists without adverse weather.

• Britain’s surprise decision to exit the Euro Zone rallied the US$ (and weighed on other currencies), but also the market continues to struggle in the face of expanding harvest and rising world production estimates. There are lots of unknowns surrounding the consequences of Brexit, but key is that US$ will likely remain supported. At current prices, Russian exporter revenue is up 11% on last year; US exporter revenue is down 10%. The US can not compete nor is there any incentive for US exporters to become more aggressive. Russian domestic prices also fell sharply this week as harvest in S Russia begins. Test weights have been lower than desired, but yields have been impressive, much like across the US Plains. Quantity remains bearish, but how major milling wheat importers work out quality is less certain, although we would remind that the N Hemisphere harvest is still in its early stages. The market is nearing initial downside targets Rallies will likely to continue to struggle amid favourable Canadian weather, projected weakness in EU/Black Sea currencies, and as exporters become more aggressive when major importer demand finally surfaces.

• Our weekly fund position charts can be downloaded by clicking on the link below:

Fund positions

• Post “Brexit” update:

• The UK has voted to exit the EU which has produced acute selling pressure across the financial landscape, including Chicago grains. In a vote of 51.9% to 48.1%, the UK will negotiate their independence and exit from the remaining 27 member EU Block. Excessive bureaucracy, immigration and the reestablishment of their borders appear to the main points why Britains voted to leave the EU. Prime Minister David Cameron has offered his resignation this morning. £Stg has fallen to 30 year lows against the US$, while the US stock market had fallen by 700 points overnight. EU equity markets were down 4-7% with some recovery noted in afternoon trade. World Central Banks have promised to offer plenty of liquidity and with the upcoming Brexit process to take years, some bottom pickers are emerging amid the carnage. The US/world grain markets should not, ultimately, be affected by the UK exit, except that the US$ is sharply higher and fund managers are holding a near record long position in summer row crop futures. Chicago corn prices have fallen 60 cents on the week with most of the break via weather. Chicago July soybeans are off 47 cents while July Chicago wheat is off 33 cents, and at new contract lows.

• The grain question of the day is will the funds unwind an even larger share of their net long corn and soybean position? December corn has fallen below its 100 day moving average while the 50 and 100 day moving averages in soybeans are well below current prices. However, an unpredictable key USDA report looms for next Thursday which promises to have a big impact on the marketplace. Amid the lashing in other financial markets, funds may be quicker to cut their losses. Although some will point to the Brexit vote, the big reason for this week’s Chicago decline lies in improved Central US weather. Some nice rains have fallen across 65% of the Midwest with any searing heat to be located over the SW US into July 7th. This means that the early corn pollination period will be favourable with rains slated for the C Plains and the dry areas of the Midwest next week. We would look for steady/2% decline in US corn/soybean good/excellent conditions on Monday  which argues for a 2016 US corn yield of trendline or above. It’s clear that the current Midwest weather pattern does not mimic any of the prior Midwest drought years of 1983, 1988 or 2012. The US climate still holds some of the lingering signatures of El Niño such as a strong jet stream and abundance of upper air humidity. In other world grain markets, China’s Dalian corn fell 6 cent/bu with January futures at $6.01. Dalian Sept soymeal prices fell $5.00/mt. Paris wheat futures are up €0.50 to €159.50/mt on the acute €uro weakness. However, amid favourable US and world weather, we do look to be a seller of Chicago rallies as funds are still laden with considerable market length. We expect a rather normal summer Midwest weather pattern into July 10th.