Both the corn and bean markets extended into higher highs for this swing overnight, aided by the general decline in the overall conditions report but have since witnessed a wave of profit-taking. In each of these markets, we have posted outside trading ranges, which at first glance would give the impression that the move could be exhausting but I would suggest that kind of assessment would be premature. Yes, there has been some scattered moisture that has passed through the driest areas of the western corn belt and upper plains over the past 24-hours and more forecast through the end of the week but certainly nothing that was widespread nor that would be considered a drought-buster. In fact, is sounds as if the potential for a high-pressure ridge settling in next week impacting western Iowa/Nebraska and points north has grown more probable.
While we still need to move beyond USDA reports tomorrow and make it to the close this Friday, I would like to point out that I believe the current level that December corn is flirting with is quite critical. Not only did we poke up to the highest level traded for a December contract in just over a year this week, the 4.10 level has been very pivotal reaching back at least to late 2014. When markets have been headed lower, the moment we have pushed below that mark, and sometimes even gapped below that point, prices have failed to recover until a low has been set and a foundation built. Conversely, when prices are tracking higher, it appears that once the 4.10 mark has been breached, it opens the door for a quick trip up to the cap at 4.50. Just to be safe, I would like to see this contract close above 4.10 this coming Friday and if successful, it would appear we have the stage set for the move. Could we even move further than that? Of course, mother nature holds the keys to unlock the chest that contains that answer, but if we did see December futures close consecutively above 4.54, I believe we would witness a rapid trip to the 5.10/5.20 zone.
Before I get any further ahead of myself or the market, we of course need to move beyond the July reports to be issued tomorrow and once again, here are the average trade estimates; 2017/18 corn production of 14.126 billion bushels using a national yield of 169.6 bpa. Bean production at 4.243 billion with a yield of 47.9. All wheat is expected to come through at 1.748 billion. Ending stock for this next crop year are estimated to tally 2.181 billion for corn, 473 million beans and 876 million wheat. I would like to point out in wheat that if that number is realized, it will be the lowest carryout since the 2014/15 crop year and would be nearly a 25% drop from last year. As I have commented previously, I come from the school that believes wheat needs to be in a positive position to be able to sustain any strength in corn and it would appear we have the stage set for such.