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