Commentary
Forecasts that are strongly favoring EL Nino type weather pattern of cooler and wetter starting mid-favored pressured grain contracts across the Board in my view. The cooler and wetter should it verify could offer relief for parts of the Midwest, that are currently besieged in long term drought, (Eastern Nebraska). Or a flash drought like Northern Illinois as Chicago’s O’Hare field recorded its 2nd driest May in history. USDA released its first crop condition ratings for corn this afternoon. Good to excellent ratings came in at 69 percent good to excellent versus the trade at 71 percent. Crop was 92 percent planted; 72 percent emerged. While the weather is hot and dry for the first ten days of June and a extension of the drought in some places, it is still too early to start to build a weather premium in my view. However, should the forecasts not verify and turn out to be incorrect and two weeks from now the forecasts are still calling for hot/dry conditions into late June, then that is another story. Weather will rule but that is nothing new here. Technically, I included a chart of new crop December 23 corn. There is a potential for a reverse head and shoulders on the charts. We settled at 5.25. If we see further consolidation down to 515/510 and hold and then reverse higher taking out last week’s highs at 5.36, near term lows could be in. however a failure below 4.96 breaks this potential up and could sink Dec corn to 4.75, which represents 30% lower on the year.
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