Suddenly the Dec. 11 corn contract is approaching $7.00/bu. as USDA raises exports and ethanol use in the recent WASDE report. Now the market is a pure weather play.
If you like roller coasters, keep your hands and feet inside of the car at all time and get ready for one heck of a ride.
New news from USDA’s WASDE report on Tuesday shows there is anticipation for China to buy more corn from the United States this year and ethanol demand is expected to remain strong.
Jerry Gulke, president of the Gulke Group, says that all of the 375 million corn increase in the WASDE report isn’t expected to stay around into the next marketing year. The increase in supply brings anticipated carryover closer to the magical 1 billion bushels the trade likes to have to make them comfortable about supply. However, at less than 900 million bushels, it’s still below the psychological comfort level for traders. That makes this summer’s weather, particularly the forecast for the remainder of July and early August, particularly important as concerns about supply are resurrected.
"USDA kept demand for next year’s crop at least stable. That then kept carryover lower by 150-200 million bushels and that told the market that USDA isn’t ready to give up on demand just yet."
Weather is now the key factor as the weather is turning hot and dry across the Corn Belt, just in time for pollination. "Some forecasters have suggested we will have hot weather in the 10-15 day forecast, so that has some people concerned. This heat that’s coming is a two edged sword. Some people that planted late need it. Others who planted early don’t need it."
In Wednesday’s QT Weather report on AgWeb, Meteorologist Allen Motew says he expects the weather pattern to bring hot and stormy weather to the Corn Belt and High Plains early next week.