MARKET UPDATE

Futures Prices Close

Overview

Grains absolutely destroyed today. Down double digits across the board, trading to our lowest levels since April for most of the grains. Taking out some technical support along the way.

Why did we get hammered so hard?

There are always two forecasts. The GFS and the Euro model.

Right now the GFS is saying that the eastern corn belt is in for some rain, while the Euro model says the eastern corn belt will stay dry.

The trade seems convinced that the GFS is the more accurate one.

Here is the difference between the two:

Whether that rain falls or not, will determine if we get that weather scare.

If the rain stays away or misses, corn prices will go probably go higher as it will likely create a scare.

If those rains hit like the GFS predicts, it becomes more unlikely that we will get a weather scare at all.

These rains (or lack there of) will be VERY IMPORTANT.

After being completely removed, drought has already started to pop back up in the eastern corn belt. It has only been a week or so..

Illinois crop ratings dropped 8% and 9% last week. The #1 bean & #2 corn growing state. IF that were to continue, the market would get excited.

Here is how the month of June has shaped up so far.

This is the average precip & avg high temp.

Very dry & hot for the eastern belt.

Not only that, but July is expected to be even hotter and drier.

The eastern corn belt may be dry, but many other key growing areas are receiving a TON of rain.

Dry vs Wet

Take a look at these charts below.

They give you an idea of what % of production each state produces

Here is that same chart categorized by wet, dry, or both.

As you can see, it is a lot of the bigger producing states that are receiving rain. Such as Iowa who accounts for nearly 17% of all production. Then you have Minnesota, Nebraska, and South Dakota.

4 of the top 6 producing states are receiving great amounts of rain.

Meanwhile, it is a lot of the smaller producing states that make up for the production areas that are dry.