Enough heat in US and Ukraine forecast and dry conditions in China should push corn higher

June 27, 2017 8:48AM CDT

With heat in Ukraine, some drought concerns in northeast China, and heat moving back into the longer-term US forecast, the market is finding some light support this morning. The 7-day precipitation models show .75 to 3 inches of rain for the eastern Dakotas and for all of the corn belt with 2 to 5 inches of rain for most of Iowa, Illinois, and Missouri. This is more than expected and will leave the entire crop very wet for early July. However, traders were fearful of cold weather in the 6 to 10-day and 11 to 15-day models. However, above normal temps are in forecast for the July 1-9 time-frame and this might have been seen as a positive development. The trade seems to be already pricing in a trend yield or higher and while this is still a possibility, it will take perfect weather to rationalize further weakness from here.

Trend following fund traders increased their net short position by 30,148 contracts for the week to 95,289 contracts and this was through Tuesday, when Dec corn closed at 388 as compared with the break to 374 by Friday. Technically, the market has failed to hold or even slow down at support levels as traders are convinced the crop is made.


Dec '17 Corn Daily Chart

Dec '17 Corn Daily Chart

RJO Futures | 222 South Riverside Plaza, Suite 1200 | Chicago, Illinois 60606 | United States
800.441.1616 | 312.373.5478

The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that RJO Futures believes to be reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgement at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades.

This material has been prepared by a sales or trading employee or agent of RJO Futures and is, or is in the nature of, a solicitation. This material is not a research report prepared by RJO Futures Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.

Distribution in some jurisdictions may be prohibited or restricted by law. Persons in possession of this communication indirectly should inform themselves about and observe any such prohibition or restrictions. To the extent that you have received this communication indirectly and solicitations are prohibited in your jurisdiction with registration, the market commentary in this communication should not be considered a solicitation.