The July WASDE report showed a one-half million acres increase in planted corn due to the increase shown on June 30 stocks and acreage report which increased domestic production estimates by 110 million bushels to 14.54 billion bushels. Export demand jumped 100 million bushels as Mexico and Japan are expected to increase their demand for U.S. corn. Ultimately with bigger stocks from the June stocks report and bigger production, projected carryout increased by 73 million bushels from the June report. The market was caught off guard by the month-end stocks and acreage report. Planted acres were expected to decline by 1 million and ending stocks were expected to be 200 million bushels lower than the report indicated. These surprises in the report caused pressure on the corn market which slowed movement in the cash market from producers.

The USDA decreased last years’ Argentina production by 1 million metric tons (mmt) Brazilian production saw a 2 mmt decrease from last month and now is 7.5 mmt lower than last year’s production.

Many areas of the Corn Belt saw extended dry periods during June and weather models predicted above normal temps and below normal precipitation in July and August. However, the dry areas of the belt saw relief from the heat with timely rains that continued into the month of July as weather experts pushed back their high heat forecasts further into August. The report data combined with the timely rains and lack of heat prompted managed money to liquidate their positions from roughly 250k long contracts in June to nearly even by the middle of July. Crop conditions have been steady and held in well this year: nationally 76 percent good to excellent during June into July compared to the five -year average for good to excellent rating in the mid-60 percent during the same the period.

The chart illustrates the change in positions over a period of time particularly noting the recent managed money position.

Comments in this article are market commentary and are not to be construed as market advice