Corn is under a bit of pressure to begin Tuesday trade despite the expected fall in corn condition ratings.
Corn in good-to-excellent condition fell by three percentage points to 65% with Iowa at 56% and Illinois at 64%. The Dakota conditions ranged from just 34% to 39% good to excellent. The weakness is coming from weather forecasts for heavy rains in key areas of the Corn Belt beginning Thursday.
Soaking rains are possible in Iowa, Illinois, Indiana and Missouri. Subsoil moisture remains low; Iowa is rated 69% short to very short and Minnesota is rated 64%. The corn rating is the lowest for the week in 12 years.
The weather forecast turns hot and dry again in the northwestern and Northern Plains, and a high-pressure ridge is expected to form and move East.
Longer-range forecasts seem to indicate a hot and dry start to July — a crucial month for corn yields. In Brazil, the safrinha corn harvest has reached 5% done. Early yield indications do not bode well for that crop, with private analysts now looking at 86 million metric tons (mmt) to 89 mmt. That compares to USDA’s April forecast of 109 mmt and USDA’s 98.5 mmt forecast in June.
The sharp fall in Brazil production puts the premium on U.S. yields even more. Funds liquidated a solid portion of their once-large net long in corn in last week’s liquidation.
To begin Tuesday they are still thought to be holding 200,000 contracts or more in the managed-money bucket. Ethanol margins in the Corn Belt are pegged at 13 cents per gallon on average.
In Brazil, ethanol prices are near the highest level ever as drought has clipped sugar cane production there; sugar production is expected to fall by 7% this year. Ethanol prices are said to be the equivalent of $2.55 per gallon in Brazil.
Soybean futures are down modestly with new-crop November under mild pressure, while spot July is just 1/2 cent lower.
The fall in soybean condition ratings to just 60% good to excellent puts that reading at the lowest it has been since the drought year of 2012.
Key states Iowa and Nebraska fell by 4 points each. South Dakota plunged 12 points to just 33% good to excellent, while North Dakota is a dismal 23%. Iowa, at 57% good to excellent, is the lowest rating since 2013. Minnesota is just 50% good to excellent. Nebraska remains the garden spot at 83% good to excellent.
China appeared again on Monday with confirmation of the rumored new-crop U.S. soy purchases. China bought 12.4 million bushels (mb) with another 4.4 mb sold to unknown destinations for fall shipment.
Rumors of additional Chinese buying will await confirmation. Soybeans are now 97% planted and 91% emerged — both ahead of the five-year averages.
Veg oils are a mixed bag, with palm oil and canola both marginally lower, while bean oil futures continue to inch higher, as Brent crude oil reached the highest level in two years. Indonesia is said to have lowered its export tax on palm oil by $80 metric ton (mt).