It has been an eventful couple weeks with the USDA stocks and acreage report released on June 30 and the July USDA Supply and Demand report being released today (Friday the 10th). In the stocks and acreage report, the USDA reduced corn acres by almost 400 million acres and revealed that corn and soybean use were both higher than expected which caused old crop stocks to be 100 million bushel less than expected The corn condition reports for the previous two weeks had the good to excellent rating for corn dropping 4%.
These were a good signs for corn prices causing the long-term outlook for corn to switch from bearish to bullish. Trade has now shifted from a “rain makes grain” view and has realized that excessive rains have caused significant quality reductions in the corn crop. Trade is now comparing this year to 2010 where we saw a rallying from the June 30 stocks report into November. Funds went from short about 90,000 contracts on June 30 to long about 70,000 on July 9.
Wheat followed corn and soybeans up after the June 30 stocks and acreage report rallying almost $0.30 even though the report looked bearish for wheat. Since then it has fallen back the full rally amount and then some. US wheat is still over-priced to the rest of the world which is a bearish signal for the future. Harvest is going better than anticipated in south central Nebraska with test weights averaging 57 pounds and protein levels between 11 and 13 percent.