The National Weather Service's 6-10 day forecasts are for above normal temperatures and below normal precipitation, reflecting the earlier ridging forecast on upper air forecast maps. The eastern Corn Belt is facing a calamity. Last night's crop progress mirrored that, with corn conditions in the good to excellent category declining by 7 percentage points. Several eastern U.S. Midwestern states reported sharp deterioration in conditions including in Illinois (which fell by 21 percentage points in the good to excellent category), Ohio (which dropped 13 percentage points) and Indiana (which also dropped 13 points). We are into our third year of seeing regional droughts. This year, the drought has been centered in the southeast and now is expanding northward into the eastern Corn Belt. A regional drought is enough of a factor, given the low corn stocks, to shift the corn market into a rationing mode where prices have to go high enough to make participants not buy corn.
Midwest rains are taking a little edge off the market today, as traders factor in the potential for improved crop conditions if a wetter trend takes shape.
Soybeans technically are still a bull market and have upside momentum and are looking for more upside in the near-term. However, a decent corrective pullback would not be surprising and would not likely be bearish. The next upside price objective for July soybeans is closing above solid technical resistance at $9.00. The next downside objective is support at $8.25.
According to the U.S. Department of Agriculture in its weekly crop progress report ,11 % of the wheat harvest is complete, compared to 34 % last year and a five-year average of 20 %. Kansas, the nation's top wheat-producing state, had harvested 2% of its crop, up from 1 % last week and the five-year average of 19%.
Wheat prices also will be keeping an eye on activity in Chicago Board of Trade corn and soybeans.
America's corn growers are not ready for the rally in corn prices to end, but that possibility exists. When all was said and done in 2004, the price of corn was about $1.50 lower than the spring peak. If a parallel price change occurs this season, the low this fall in the December corn futures market would be approximately $2.85.
