Corn in Recovery Mode With Summer Weather Here
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After a cold, soggy start to the season, it鈥檚 finally feeling like summer in the Midwest, and corn fields are recovering.
A turn toward warmer weather should be beneficial for the battered crop, and government data signal that conditions are starting to bottom out. The changing weather also means that investors are tapping the brakes on their bullish bets after prices took a spectacular ride higher.
Key growing areas are likely to stay warmer and drier this week, helping the crop catch up to normal growing stages after the heavy rains caused record planting delays. Corn鈥檚 rally has started to cool off after futures in the second quarter surged 21%, the best such performance since 2014.
U.S. crop ratings rose by 1 percentage point to 57% good or excellent, the Department of Agriculture said July 8, matching expectations from analysts surveyed by Bloomberg.
Meanwhile, money managers are feeling less positive on the market. In the week ended July 2, the investors鈥 net-long position dropped 3.3% to 181,648 futures and options, according to U.S. Commodity Futures Trading Commission data. The figure, which measures the difference between bets on a price increase and wagers on a decline, was the first loss in seven weeks.
crop progress for the first week of July! 鈥 U.S. Grains Council (@USGC)
Short-only holdings jumped 7.3%, the most since April.
Corn prices tend to fade seasonally at this time of year as the North American harvest approaches. Some traders may be cutting their longs until more information is known about the size of the crop, said Brian Hoops, senior market analyst at Midwest Market Solutions in Springfield, Mo.
USDA will release a monthly supply and demand report July 11. Analysts expect the agency to trim its outlook for domestic corn and soy production. However, USDA also is conducting an additional survey this month on plantings 鈥 those results won鈥檛 be published until Aug. 12.
鈥淗istorically, they don鈥檛 want to be long after the Fourth,鈥 Hoops said of fund corn positions after the July 4 holiday.
鈥淭he caveat is we don鈥檛 know what the planted acres are,鈥 he said. Estimates are coming in at a 鈥渨ide range.鈥 The final figure 鈥渃ould really influence our ending stocks and, in turn, our prices,鈥 Hoops said.
