It is my belief that weather trade positioning ahead of the three-day weekend drove the market today. Corn futures rallied double digits with the Midwest weather models showing 15 days of dryness for at least 75% of the corn belt. The USDA says it will produce its first G/E ratings for the US on Tuesday. The basis chart shows spot futures are trading about 35¢ below Midwest cash. A big reason why July corn has rallied above $6.00 and has traded back up to a 75-cent inversion versus new crop December. On the flip side export sales are clearly lagging. Export sales released on Thursday showed net old-crop sales reductions for a second straight week. It is my belief that Brazil’s ’s record crop will be undercutting U.S. corn on the global market with ample supplies coming when the combines start in Brazil’s major producing regions to roll in a few weeks. Meanwhile, the new-crop US production outlook seems promising so far, with early plantings and increased acreage pointing to a large crop should weather cooperate. Lack of demand amid weather unknowns in a supply side driven market could keep the market supported near term. However, without a weather premium longer term, producers in my view should be looking at the latest new crop rally as a gift. I will provide some specific hedge recommendations on my written pieces next week as well as on my webinar next Thursday. Happy Memorial Day weekend to all!
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