Afternoon Corn: Condition downtick, tour results, could help corn overnight

Afternoon Corn:  Condition downtick, tour results, could help corn overnight

'Rain makes grain' could be heard up and down LaSalle Street to start the week. Futures left "Feel Good Friday's" close overnight, maintaining a mostly weaker tenor throughout the day. Corn would finish about six cents lower up-front. If looking for a silver lining, the market did not even come close to Friday's low, despite plenty of pressure on the morning open? Managed Money traders were viewed net sellers of about 11,000 corn today, and when assuming recent CFTC data, are very close to net flat the corn market. Cash trade was very quiet as summer vacation season gets into full swing.

Crop Progress data after the close has a fair chance of "flipping the script" on the rain bears overnight. Corn condition ratings downticked wk/wk; 56% of the crop is rated "Good-Excellent", which compares to 55% last week and 68% last year. Poor-Very Poor also increased 1% wk/wk to 14% (versus 12% P-VP last year). Trade was looking for "steady-to-better"? Only four states improved (CO, IL, NC, ND); the rest were steady or lower. 95% of the crop was silking. 55% is in the dough stage, which is 21% behind average levels. 15% is denting. Milo (sorghum) conditions also downticked wk/wk, but remain well above year ago. 6-10 & 8-14 day maps took out the heat; 6-10 day is wet, but 8-14 day is mixed (dry west, wet east?). Weekend rains were widespread but somewhat spotty; 1-2 inch rains were seen in S MN, S IA, MO, KS, parts of IL, parts of IN, and NW OH. This week's rain outlook favors the SW rump of the Belt.

Mid-Day Grain Inspections were light in corn. For the week ended 8/15, exporters shipped 510,334 metric tons of corn, which was lower than the 719,810 shipped last week, and less than half the 1.097 mmt shipped in the year ago week. YTD inspections move to 46.16 mmt; even when factoring in the larger 'official' Census data, 18/19 U.S. exporters will be extraordinarily lucky to hit 50 mmt in the remaining two-plus weeks left in the marketing year. USDA forecasts stand at 53 mmt, implying future downgrades will be imminent. The Sept 1 Quarterly Stocks report will determine whether domestic demand has been understated and can offset some of this export shortfall?

Elsewhere, livestock started in the "plus" column Monday after last week's big drop. Dairy and ethanol were both a little lower today, though technically margins improved slightly intraday for producers of both? The ProFarmer Crop Tour kicked off today, starting in South Dakota in the West and Ohio in the East. Both states were at the epicenter of the Prevent Plant issues this spring, and "blank" fields received many tweets. The day's results will be available overnight.

In the options pit, volatility was weaker in deafeningly quiet trade. Sept options expire Friday. ATM straddle selling and new crop put selling appeared to be the focus today. One player sold 800 dec 420/480 call spreads at 3 ¼ cents, covered delta neutral vs 375 ¼ futures. Calendar spreads were weak between crop years, but interestingly enough, the U/Z roll shook off early weakness to close slightly better. Sep goes into delivery late next week. Corn gained a little on the beans, but lost a little to the wheat. Technically, the battle lines have been redrawn. Corn faces significant resistance near the post-report gap area just above $3.90, portending getting back above $4 will be difficult in the short-run. Similarly, we have found support near the May lows - roughly $3.70 CZ.

KJ