Good Morning,

Commodities open with a weaker tone this morning as weather forecasts have changed and tariff news remains unchanged. Conditions have been favorable with the forecast showing rain in the next 5 days for the corn belt. The extended forecasts for the first week of July remain warmer with less precipitation, but have cooled since Fridays forecast. Traders will be watching forecasts for the first couple weeks of July for any indication that it gets hotter and drier with pollination expected those weeks for most of the corn belt.
The USDA Acreage and Stocks report is out this Friday at 11am. Corn acreage is expected higher than the March report which could push corn lower. Historically the USDA does not adjust yield until the July or August report after the pollination period. The USDA is currently using an 88 million acres and a 174 bushel per acre yield average for their balance sheet. These numbers would suggest a 1.6-1.7 billion bu. carryout. If we increase acres to 89 million this would increase to 1.8-2.0 billion bu. Acres remaining the same and in increase in yield to 180 bpa(several analyst expectations as of now) would result in a 2.0-2.1 billion bu. carryout with the same acreage. All of these estimates assume that total use remains the same. With the current trade situation around tariffs, demand could drop and increase ending stocks to last years levels!
Fundamentally I do not believe we should not be trading as low as we are, but politics has been the “Trump” card as of late and the markets are struggling to find any traction. Producers sitting on old crop corn are running out of time to move it and may not be given many more opportunities. Historically the June Acreage report and July 4th weekend bring an end to any old crop marketing opportunity for producers. This year the end appears to have come much earlier, but time will tell.

Reminder that we will be closed for grain receipts on Tuesday 6/26/18.

Have a Safe Day!

Garry Gard