Morning Market Direction:  Corn up 6, and 3; Beans up 3

Markets opened a touch lower but have firmed up overnight, trading new highs as we head into the morning break.  Funds adding length across the board, the trade in general continuing to debate what acreage will look like in the end and where corn and bean production could end up this fall.  Weather forecasts for this weekend are not planter friendly – remaining beans to be planted will struggle though the crops that were able to get in within the past two weeks will certainly benefit.  Hitting new highs is certainly a big deal, though cash market activity/dynamics that we’ve seen over the past couple of weeks has injected additional uncertainty and volatility in cash and futures markets.

Though weather/production concerns/bean planting delays with upcoming rains are all contributing to the higher move in futures, the strength in basis is also pushing values higher.  Feels like we are on step two moving to step three of a bullish market (1. basis has firmed significantly but is not pulling enough bushels out in the pipeline despite the initial rally that has gotten us to where prices are today,  2. basis short is covering themselves temporarily via bull spreads/buying nearby futures which has tightened spreads, 3. tighter spreads still not totally filling nearby demand thus forcing additional futures buying leading markets higher.)

The Senate Ag Committee had a lot of questions for US Undersecretary McKinney, USTR Chief Ag Trade negotiator Doud and USDA Chief economist Johansson yesterday that was supposed to be focused on ratifying the USMCA but instead had plenty of questions about where we were at with getting the US/China  and US/Japan trade deals finalized.  Since there really was nothing to report/update, no one had any real answers at this point.  Concern over getting something put together with both countries continues…one wonders if the Chinese at least will try and wait till the 2020 election to see if a leadership change in the oval office brings a softer approach that they can more easily manipulate.  China’s economy is suffering – note two stories below talking about their factory growth is the slowest since 2002, and their billion-dollar steel industry is and will continue to be challenges the longer this drags out.  Feels that though the tariff issue may be frustrating some in the rural areas of the US, there is still support for getting something put together that puts everyone on a level playing field.

A stormy period over the next two weeks produces at least near-normal rainfall in all areas, and a moderate to high probability for above-normal rainfall in and adjacent the Corn Belt.  Temperatures average slightly to moderately below normal over the next 10 days, likely followed by a sharply warmer period over June 25-30 as upper-level high pressure forms across the southern U.S.  Scattered t-storms accompany warmth, but the exact setup will take time to determine.  Weather beyond then in July is a wildcard.

Deja Vu?  Another "up" market day expected.

Corn - $4.00 Spring    

Beans - $9.54 Spring