After what is now 4 days of little or no fund trading we are quickly seeing corn go back to what would be considered normal summer trade. That means this market will quickly react to weather map updates every day which is exactly what was seen today. While the weather maps last night through noon Monday don't show rains for everyone, there was certainly more rain on these maps than what trade saw going home last Friday.
Right now the forecast suggests moderate rains in the 10-day forecast with temps to be slightly above average days 1 - 5 and then turn to below average days 6 to 10. Trade was looking for a 1% decline in the GTE ratings on the afternoon report and while there wasn't much reaction to that today it could help a turnaround Tuesday if seen this afternoon. Short term as long as funds remain on the sidelines we will see corn react to each day's weather map update so that is where we should keep our trading focus for the next few weeks. Longer term we will have to focus on what forecasters have for La Niña updates.
• With funds quiet bulls will be looking for any amount of less rain in the forecast to offer reason to bounce back higher
• With the corn GTE rating at 75% today it should not be hard to find at least a slight lowering to offer short term bounces
• Next chart support is filling the gap in December at 420
• Without fund activity bears should finally feel like they have a slight advantage with "normal" traders unwilling to support prices this high just yet
• Sellers will want to be quick to sell bounces as long as the forecast maps are not threatening to actual yield declines
• Any sellers thinking of holding shorts longer term should be aiming for that same December chart gap at 420
On Friday it looked like we had moved into a full scale weather market. Monday's forecast was wetter than Friday's and is calling for a lack of heat in the extended forecast so the market took some of Friday’s gains even though the rain has yet to fall. (Chart-wise it was an inside day). Not all the models are in agreement on the amount of rain that will fall and this will lead to a lot of radar watching over the next few days to see if rain falls as advertised. If it does fail to materialize don’t be surprised to see weather premium added back into the market.
Adding to the beans weakness, we did not see money inflows into the market today like we saw on Friday. The weekly inspection figures came in better than thought and more than enough to help meet the USDA’s export target which did provide some support to the market. The trade is looking for tonight’s crop rating to drop 1 % to 73% good to excellent. They are looking for planting progress at 97%.
We look for the market to continue its wild day to day price swings as the trade reacts to every weather forecast. We view the current setback as a correction in a bull market as the long term trend continues to be higher. We think setbacks will be supported until trade gets a better handle on acreage adjustments on the June 30 report. We also have to get a better handle on this summer weather and see how accurate the hot dry forecast is.