Reality has a way of shinning through. If you were long corn at Chicago the reality this morning is you have done a packet of money. Corn had spent a good part of the last month rallying on the back of one make believe thing or another. The latest being a US long term weather map showing hot dry conditions, these are now looking less and less likely.
The USDA weekly crop condition report simply did not reflect the concerns of any of these punters over the course of the last few weeks and from an outsiders perspective one could have easily argued the crop must be in ideal conditions considering the rainfall and timing of sowing.
Unfortunately for the long punters this outside perspective appears to be closer to reality than their position.
Yesterday’s crop condition report pegged US corn at 75% good to excellent. That is the highest rating for this time of year since 1999. Yes it’s has a long way to go but looking at historical yields versus condition rating and then taking genetic improvements into account at this stage of the game one could argue that yields, given an average finish, may well come in closer to 11t/ha than 9t/ha.
The weakness in corn sent futures for the grain to limit down. This means that tonight’s limit is now 40c/bu. With nearby corn now back under 400c/bu it may well start to find support but I’d in no way put my money on that.