Corn is currently down 2 and soybeans are up 3 to start the day. We have seen the old crop to new crop inversion get bigger over the last several days and it looks to continue as we approach first notice day.
On Tuesday afternoon, there were rumors circulating that China purchased 8-10 cargoes of U.S. new crop soybeans. This helped to offset the early overnight selling that was based solely on a forecast that shows several rain events in IA and into Northern IL. Despite the Chinese news, the market’s attention is expected to quickly shift back to US weather where the forecast shows improving chances of significant rainfall in the Eastern portion of the Midwest, including IA. It is not yet clear if the forecast rain is enough to alleviate current drought conditions. According to USDA data, 41% of US Midwest soils are in drought. The NW and Northern Plains remain hot and dry with more heat called for in the coming 7-10 days.
The weather models are still calling for rain across the Central US in the next week. Depending on the model, some of the heaviest rainfall has shifted to the South and East. The market will be focused on any updated forecast and changes to the expected rainfall amounts, particularly in IA and West. Heat continues in the Plains with the latest models calling for even hotter temperatures for the Upper Plains over the coming 7-10 days.
A report from Reuters yesterday suggested that US ethanol production will contract in the coming months due to tighter than expected corn supplies and higher costs. We have seen it before; ethanol plants simply will not run if producing in the red.
Corn prices in China have dropped to the lowest levels since December due to record imports. Imports of the grain to be used in feed has increased 5x this year compared to last and are expected to reach a record amount this year.
Have a Safe Day!