What Traders are Talking About:
Overnight highlights: As of 6:00 a.m. CT, corn futures are 11 to 14 cents higher, soybeans are 20 to 24 cents higher and wheat futures are mostly 5 to 11 cents higher. Based on the strength of overnight gains, I expect price strength to carry through to today's session. Cattle and hog futures are expected to open steady to firmer this morning.
* Heat, dryness tak toll on corn and beans. Hotter temps and building dryness caused corn and soybean crop ratings to decline from last week. USDA's weekly crop condition ratings showed 66% of the corn crop is now rated "good" to "excellent" while 9% is rated "poor" to "very poor." For beans, 65% of the crop is rated "good" to "excellent" and 8% is "poor" to "very poor." For both crops, that's a decrease of 2 percentage points in the top two categories and an increase of 1 percentage point in the bottom two categories. When USDA's crop ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500 point scale), the corn and soybean crops each dropped 4 points to 371 and 363, respectively. In addition to a drop in condition ratings, crop progress remains well behind normal for corn and soybeans.
The long and short of it: Crop conditions signal corn and soybeans need a drink. Building dryness, especially in the western Corn Belt, is starting to take a bite out of crops.
* Rains needed, but forecasts generally non-threatening. The drop in crop ratings supported corn and soybean futures overnight, but it's going to be hard to get traders too concerned as roughly two-thirds of the corn and soybean crops are still rated "good" to "excellent" and forecasts aren't threatening. Temps are forecast to be slightly above-normal through Friday, but they won't be oppressive. Temps are then expected to moderate by the weekend and run near normal next week. There isn't much meaningful precip in the outlook, though "popcorn" showers will aid areas lucky enough to get the rains.
The long and short of it: Corn and beans are getting a pop early this morning, but unless forecasts turn hotter and drier than they currently are, there likely isn't enough concern among traders to fuel sustained buying interest.
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