Bulls Charge Into Crop Tour Week

Last week’s post-report bullish momentum continued into the new week with impressive corn and bean gains with significant technical breakouts for both, while wheat finished with fractional changes. With the ProFarmer Crop Tour starting today and social media reports influencing trading decisions, it will be an interesting week as US weather turns more seasonal on rain and temperatures. The PFT will not be the sole source of information this week, but it is obvious that the bulls have better footing since the USDA took out the risk of meaningful acre and yield increases.

News and Notes:

• Parts of the ECB, Illinois and Indiana in particular, have been inundated by record rains and flooding but a drier outlook is forecast for this week. The record heat in the Delta and S Plains will also take a break as temperatures across the Corn Belt normalize. Europe has received some welcome rain and cooler temperatures, but it is too late to help their summer row crops.
• The daily November bean chart is on Page 2 and shows today’s impressive technical breakout taking prices to new 3-week closing highs and clear all major moving average resistance. Although the funds have been long all year, they continue to add to their impressively large position and now estimated to be long 625 MBU heading into a critical month of US bean weather and the September 24th Trade Summit between the US and China. A good sign for a continued rally in the short-term is that the RSI is not overbought. Although the market will have some day-to-day volatility, the new overhead technical target is the late July contract high at $12.56 ½. Today’s close was$12.16.
• The ProFarmer Crop Tour began today with social media watching every report on kernel and pod count from each stop. Last week’s smaller crop tours released numbers that support the USDA’s smaller crop estimate from last week with yield corn being the most likely to continue to slip. The bean reports are of very healthy plants with huge pod and seed counts which could push final US yield back over trend at 53 BPA.
• There were no flash sales to China or anyone else this morning, but with diesel rallying another dime, the bio-fuel markets were also higher.  Bean oil is trying to make a technical breakout to continue to follow diesel higher. Blending margins for ethanol and bio-diesel remain very healthy. Weekly export inspections came in at expectations and keeping up with the pace to meet USDA projections.
• This afternoon’s crop ratings are expected to fall 1-2% after last week’s flooding in the ECB and severe heat int eh southern Corn Belt. WCB ratings should stay flat to potentially improved as E NE and W IA received welcome rains. It will be interesting in the ProFarmer Tour finds yields more in line with current crop conditions or if there will begin to be a disconnect between corn and beans and trend.
• There was little political news on either war front over the weekend as rumors persist of secret negotiations on both fronts, but official word. The Straits and the Black Sea remain mostly closed, which will continue to impact price discovery.

Today’s corn and bean breakouts show the speculative and end user trade is becoming more concerned about declining US corn yields and how the strong bio-fuel margins could add even more demand for both. The markets have had a great run since last week’s USDA report, and unless the PFT finds higher yields than expected, the momentum should continue to be flat to higher heading into September futures first notice day positioning at the end of the month. The trend is your friend, and all Sales Targets are set above the markets to take advantage of further strength.