Fundamental Analysis: Again, issues in the Chinese equity markets triggered the decline in grain markets, corn included. At the same time, the trade generally perceives the weather as being beneficial. It’s warm, but not hot, and moisture is more than adequate nearly everywhere, with too much still in some parts of the Corn Belt. Sunday night, eastern Illinois and parts of Indiana were hit by heavy storms. Going forward, the forecasts are turning cooler, with generally wetter conditions. That’s low stress, but also for some spots could mean potential disease problems. Given that prices have nearly removed all of the premium put in them by the June rally, the break is becoming overdone. We do suspect the trade is going to bias their Aug 12 expectations up a little from where they had been with the weather shift, potentially tilting the odds against seeing a negative set of numbers. Whether they are friendly or not depends on what the USDA finds. The trade is looking for today’s condition rating to be steady/1 point higher for the good/excellent; the USDA reported 70%, up 1 from last week. The weekly export inspections, 43.6 mln. bu., keeps the US on track to potentially reach the USDA forecast.
Tech Comment: Dec corn is in the window for the 6-7 week cycle to bottom, a window that will stretch over the next week/10 days. Dec sliced through the $3.98-$4.00 support, putting it in position to potentially test the June $3.62 low. There is a possible swing target at $3.78. While it’s difficult to closely identify a target on a break like this, we still believe the turn up in June confirmed a 40-week low and turned the basic trend higher. It’s not unusual for a market to retest the level where it first started a primary move from. The first possible sign of a bottom to this break, and the beginning of the end of this retest would be a close over Friday’s $4.02 3/4 close. The next key point will be near $4.10 depending on the final low of this break.
Basis Trends: Gulf +45 stdy, Eastern Corn Belt – stdy/up 2, Western Corn Belt – stdy/up 2.
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