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The grain markets were sharply higher overnight on concerns over hot/dry weather through the 10 day period. The USDA released their Crop Progress report yesterday. Corn was rated 63% good-excellent vs. 66% last week and 69% on average. Ratings in IL dropped 4% to 52% G-E, IN ratings dropped 12% to 37% G-E, OH ratings dropped 11% while IA ratings were unchanged at 67% G-E.
Soybean ratings also dropped sharply. The US crop is now rated 56% good-excellent vs. 60% last week. Major drops were seen in IL, IN and OH. Spring wheat conditions rose 1% in the good-excellent category, now rated 76% G-E. Winter wheat was rated 54% G-E vs. 53% last week. The winter wheat crop is now 48% harvested vs. 35% last week. The weather forecasts combined with what we’d describe as "overwhelmingly bullish" crop ratings have pushed the December corn contract within a few cents of $5.50 this morning; November soybeans are trading near $13.75.
"Weather Market 2012" is now in full swing. Forecasts for hot/dry weather through the 10-day period will bring much of the early planted corn into the first stages of pollination, which will be a major issue for producers. Our lead forecaster estimates that 35% of US corn production received less than half of its average rainfall during the last 30 days. Only 24% of US corn production received "normal" rainfall during this same period. Intense heat and strong winds will cause soil to dry faster than usual during the next 3-5 days, especially.
Noted agronomist Dr. Cordonnier lowered his yield estimate for corn to 159.0bpa, down 2bpa from last week. Cordonnier also lowered his soybean yield estimate to 42.5bpa from 43.0bpa last week. Another noted academic, Dr. Darrell Good of the University of Illinois, anticipates that feed and residual use of corn during the 3rd quarter was larger than the estimate for last year’s use.
Outside markets are mostly quiet this morning. Crude oil and equities are both up slightly. The Euro currency is also marginally higher. Despite concerns over the Eurozone and other macro factors, our ag markets will trade primarily on weather for the time being.
As far as charts are concerned, December corn is flirting with major resistance at the $5.50 area. A close above $5.50 this week opens the door for a quick move to the $5.70 area.
Export Sales will be release Thursday morning; Quarterly Stocks and Acreage will be released on June 29th at 7:30am CST.