Corn prices fell under a little pressure during the second half of last week and are backpedaling a bit this morning on talk of cooler temps and rain across Argentina.

From a technical perspective, it was actually the first lower weekly close since early in 2018. However, I believe the fundamental story remains intact. Demand for U.S. corn continues to look extremely strong and the South American crop still holds a lot of uncertainty. It feels like the market might prefer to trade in a sideways to slightly lower channel for a short period of time until it learns more about second crop corn in Brazil, yields in Argentina and new-crop planting here in the U.S.

There's already a lot of debate brewing over U.S. corn acres and the actual number that will be planted. A couple of estimates out last week, seem to confirm what I've be thinking, the USDA's early estimate of 90 million might be a bit too high. I remind myself however, it was just a couple of years ago I felt the same way, only to see the USDA push their U.S. planted corn acre estimate higher. I want to believe that cash-flow on the farm is tight and that higher soybean prices will help push more acres that direction.

We obviously won't know for a few more weeks. I should also note, talk of potential trade wars could also create some nearby headwinds. The European Union recently released a 10-page document detailing how they might place a 25% retaliatory tax on U.S. corn if leaders in Washington proceed with their proposed tariffs on European steel and aluminum.

From what the numbers show, we exported about 28 million bushels of corn to the EU last year. Which really isn't a whole lot, so I don't see it as being a huge deal as of yet. But if other importing nations start taking a similar approach towards the trade tariffs, it could become a much larger deal in a hurry.

This is certainly something that needs to be monitored. I'm also keeping a close eye on the extended weather forecast for southern Brazil, which I believe is the area that could run into some second-crop production hiccups if the rains shut off early. 

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