Corn managed to break out of a consolidated range to the high side this week. In June 8 trade, July contracts traded near the winter highs and the December contract exceeded the winter high of $4.0375. Much of the move was following the increased volatility in the wheat complex and the developing drought situation in the northern plains. Global Forecast System models call for good rains in the eight to 14 day forecast but European and Canadian models show a drier outlook. Corn backed off from its highs on June 8 as traders seemed intent to trim positions with this uncertainty.
Weekly corn condition ratings were 68 percent good to excellent compared to 65 percent last week. Poor to very poor ratings were 6 percent compared to 7 percent last week. Corn emergence is at 86 percent nationally versus the five-year average of 87 percent. Progressive Ag’s yield model currently shows below trend line yields based on these numbers. Delayed planting and replanting through much of the eastern corn belt was not enough to break the market out of the established range this spring. With the dry forecast, the market maybe coming to a realization that we could experience below average yields in 2017. It is likely that corn acres will be less than the 90 million from the March 31 intentions report due to the planting struggles in the eastern cornbelt.
The June monthly World Agricultural Supply and Demand Estimates report left old crop and new crop corn stocks and use unchanged from the May report despite recent good demand and export numbers. 2016-17 U.S. ending stocks are estimated at 2.295 billion bushels and 2017-18 ending stocks are 2.11 billion bushels. USDA left the U.S. average yield estimate at 170.7 bushels per acre. Brazil corn production came in at 97 million metric tons versus average trade estimates of 96.48 million metric tons. Argentina corn production was 40 million metric tons versus the average guess of 40.29 million metric tons. World ending stocks are at 224.6 million metric tons for 2016-17 and 194.3 million metric tons for 2017-18.
CFTC data for May 31 showed noncommercials increased the unusual heavy net short position for this time of year by 24,000 contracts to -201,000. We would expect this position to be reduced in next week’s numbers as much of this week’s move was short covering. For the week ending June 8, July corn was up 15 cents at $3.8775 and December corn was up 12.75 cents at $4.0375.
Weekly exports sales were bullish totaling 18.8 million bushels, with 13.7 million bushels sold for the 2016-17 marketing year. This was above the 7.9 million bushels needed this week to be on pace with USDA’s May demand projection of 2.225 billion bushels. Weekly shipments of 47.8 million bushels were above the 40.8 million bushels needed in this week’s report. Outstanding sales dropped to 430.6 million bushels, 25 percent less than the previous year. Inspections were 46.3 million bushels for the week ending June 1. This was above the 42 million bushels for the same week a year ago. Inspections for 2016-17 totaled 1.745 billion bushels, up 50 percent from the previous year and well above USDA’s projected 17 percent demand increase.
Weekly ethanol production averaged 999,000 barrels per day. This was down 2.06 percent versus last week and down 0.7 percent versus last year. Stocks as of June 2 were 21.982 million barrels. This is down 3.43 percent versus last week and up 8.69 percent versus last year. Corn used in last week’s production is estimated at 104.9 million bushels. Cumulative corn used for ethanol production for this crop year is 4.2 billion bushels. Corn needs to average 97.197 million bushels per week to meet USDA’s estimate of 5.45 billion bushels.