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Corn bulls are watching weather and WashingtonCorn bulls are watching weather and Washington

Wildcards in the corn market could make an impact on corn prices.

Kevin Van Trump

June 7, 2018

2 Min Read
gopixa/Getty Images

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. 

About the Author(s)

Kevin Van Trump

Founder, Farmdirection.com

Kevin is a leading expert in Agricultural marketing and analysis, he also produces an award-winning and world-recognized daily industry Ag wire called "The Van Trump Report." With over 20 years of experience trading professionally at the CME, CBOT and KCBOT, Kevin is able to 'connect-the-dots' and simplify the complex moving parts associated with today's markets in a thought provoking yet easy to read format. With thousands of daily readers in over 40 countries, Kevin has become a sought after source for market direction, timing and macro views associated with the agricultural world. Kevin is a top featured guest on many farm radio programs and business news channels here in the United States. He also speaks internationally to hedge fund managers and industry leading agricultural executives about current market conditions and 'black swan' forecasting. Kevin is currently the acting Chairman of Farm Direction, an international organization assembled to bring the finest and most current agricultural thoughts and strategies directly to the world's top producers. The markets have dramatically changed and Kevin is trying to redefine how those in the agricultural world can better manage their risk and better understand the adversity that lies ahead. 

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