Commentary
December futures extended a sideways grind, with traders seemingly content to wait until the Aug. 12 USDA Crop Production report to make any firm decisions on the market’s next big move in my opinion. Pollination is done and Midwest weather looks mostly favorable especially East of the Mississippi. That said, the Aug. 12 report will be just one of several attempts to nail down the size of the harvest. December corn is in a wedge now in my view, (see chart). The longer the market stays in a wedge, the better odds of a sizable move coming in my opinion. Direction is the question now. Normally harvest pressure wins out in the long run and the grain markets see harvest pressure in August and September amid funds getting a better grasp on crop size and ending stocks. However this year is different. Coming out of pandemic, global stocks both domestically and globally are much tighter than they have been. The US Corn carry could be anywhere, from 600 million to 1 billion bushels less than it was 2 crop years ago. The USDA has National yield at 179.5 , a record high, but private forecasters like Informa have put it at 176.5. I personally don’t think the USDA will make any sizable yield adjustments for Corn in this report in my view, however, rallies in beans and a continuation of wheat’s push higher could pull corn higher acting as tail of the Dog. That being said crop ratings have disappointed this week as corn dropped 2 points in the good to excellent category and the crop is past pollination. Should conditions during the fill stage not improve in the Dakotas, Minnesota, and parts of Iowa, in the weeks to come without rain, I think beans and corn can see a resumption of the rallies that occurred in the Spring. I am going to refrain from putting on a report day play for now, but will put a suggestion on Mondays report. The last three weeks, volatility has been sucked out of this market after a wild April , May and June. I think it returns at some point in August perhaps after Mondays condition report or the Thursday crop report.
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