The markets have continued to be weather driven over the past six weeks, but we are now getting down to critical stages for both corn and soybeans. Many will say that their corn crop is made and others still have a ways to go to get to that point. We have had ideal growing conditions for most growers from this years planting and through pollination.
The USDA has continued to up the crop conditions every week, until this past report. The conditions are at or near record pace and having the first step backwards, this late in the production year, is a testament to how good the conditions have been for this crop. Even with the 1% setback this week for corn, the silking and dough stage are ahead of the 5-year pace.
Point being: We have been clipping along at a great pace and the bearish sentiment has been priced into the market. So now, getting close to the finish line, will one bullish card cause some fireworks? The extended forecast has little or no rain over the next 10 days and the trade will start to focus on the next USDA report in August, which will possibly give one of the highest yield numbers ever given.
Most in the trade think that we can certainly see a 170+-bpa yield projection, but will we reach those lofty yields if the finishing rains don't come? If we can gain some traction from a bullish weather story, will the funds find some favor for the corn market? The funds have been electing to lighten their load in the commodity sector over the last 6 months, and presently we sit at a net long position for the grains at 31,000 contracts compared to 600,000 contracts earlier this spring.
There is a huge amount of dry powder on the side line to push prices higher if the weather can provide some questions on the way to the finish line. Even with the cooler temps and limited moisture going into the final stages of corn production, yields could see some of the top knocked off and support prices.