June 7, 2018
Corn bulls are talking about the longer-term weather forecast looking hot and dry. In case you missed yesterday's headline, the EU weather model is forecasting increased dryness and heat across the main portion of the U.S. for the next couple of months. Depending on the weather guru you like to follow, most will tell you, the EU model is a bit more reliable longer-term than the GFS.
Keep in mind however, we are talking about a longer-term weather forecast... something I've lost small fortunes betting on in years past. As I've gotten older and paid dearly for my education, I prefer better odds and taking easier shots, the longer-term weather plays can be extremely hard to hit.
The other wildcard in the deck is Washington, specifically how U.S. leaders will proceed with trade negotiations. As we learned yesterday, Mexico is taking a harder stance, issuing a 20% tariff on U.S. pork. The pork industry is saying the new tariff will essentially eliminate our ability to compete effectively in Mexico. Reports circulating show Mexico is also imposing additional tariffs on U.S. steel and additional agricultural products like apples, potatoes, certain types of cheeses and bourbon.
There are also headlines circulating that China is offering to buy some $70 billion more in U.S. ag, energy and manufacturing products if Washington is willing to do away with the tariffs.
From a technical perspective, the trade will want to see the old-crop JUL18 contract trade back in the $3.90-4 range, for at least a brief period, before it feels more confident about resuming its bullish tilt. Nearby support in the JUL18 contract looks to remain in the $3.75-3.80 range. The new-crop DEC18 contract will need to trade back in the $4.10-4.20 range to get the trade feeling more confident about the upside. Nearby support still seems to be in the $3.90-4 range.
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