This is the time of year when traders hinge their bets on every single weather model run for the U.S. Corn Belt, and the past week has been no exception.

But even with the seemingly back-and-forth weather models, large global supplies may keep the lid on any potential seasonal rally in Chicago corn futures this summer.

Corn futures hit the highest price on a continuous chart in nearly a year last Thursday on a warmer and drier outlook. Forecasts started trending wetter over the weekend and futures declined again this week, hitting two-week lows during Thursday’s session.

But the market’s hypersensitivity to weather was brought into focus again late in Thursday’s trade, as the midday model update showed much warmer and drier weather in the next two weeks for parts of the Midwest than was previously expected, and corn futures closed well off the day’s lows, aided by strength in wheat.

Hedge funds entered this growing season holding unusually bearish positions in corn futures and options, which prompted many analysts to warn of the potential for an explosive short-covering rally should yield concerns surface.

But plentiful domestic and global supply has led to muted market action. The U.S. Department of Agriculture predicts that by the end of 2016/17, the world will be sitting on its largest-ever corn stockpile, capped off by a 43 percent year-on-year increase in output from major exporters Brazil and Argentina. The stateside supply will be the largest in 30 years.

There is still a lot of the growing season to get through, as the U.S. corn harvest does not begin until September. But unless iron-clad proof comes along that corn yields will fall more than a couple percentage points below the long-term trend, another meaningful rally in futures this summer may remain out of reach.

Stubborn Reactions

When the USDA has published major reports this year, those release dates have failed to produce any significant moves in corn, soybean, or wheat futures relative to past years. The huge global supplies are widely to blame.

Through May, the price swings that followed USDA’s monthly supply and demand reports, acreage estimates and quarterly stocks views were down 26.88 percent from 2016, and the daily price moves on report days so far in 2017 are 45.83 percent below the 10-year average, according to Reuters data.

Granted the 2017 reports have not exactly dropped stunners on the market, but traders may have been able to justify a slightly more bullish take on corn if the world were not awash with it – especially with lower-than-expected U.S. acres and sharply decreasing global supply into 2018.

Dampened volatility amid the global supply glut has led to declining profits for the world’s largest grain merchants. And price gains could be even further limited in the coming weeks as some domestic corn end users are stocked through July in the wake of last week’s farmer selling spree.

Speculative investors have been left largely indecisive over what to do with the yellow grain as supplies are ample, but a shaky start to the U.S. growing season and constantly changing weather models have raised legitimate concerns.

Money managers began drastically shedding their net bearish corn view in the first week of June. But just over half of this move was attributable to new longs in the market, meaning that the short covering – despite it being the largest round since February – was not the leading driver.

In the week ended June 6, funds extended their outright corn longs by 16 percent over the prior week while cutting back on outright shorts by only 7 percent. With speculators still holding a record number of short positions for the time of year as of last Tuesday, it is clear that many are not as eager to budge on their views.

Clarity Nears

The next three to four weeks historically can be some of the most volatile of the year for corn futures, as four of the last five years have featured gains in the July contract of more than 5 percent beginning June 1 through expiration. The recent rally topped out at 4.66 percent above the June 1 price on Friday.

Unless there are obvious issues with the crop and firm reason to believe the harvest will come up short, corn futures often have a harder time rallying in late July and August since traders have a better handle on yield potential at that time.

The July 4 holiday in the United States often marks a turning point in the season, as focus shifts entirely to weather and yields. And with an extra day off from trading, there is plenty of time for the weather models to trend off into a different direction, which is why the evening model runs on July 4 are so closely followed as they set the tone for the next day – or longer.

If corn conditions have improved and are stable by the time USDA issues the first crop progress report of next month on July 5, speculators are going to feel more comfortable with the bearish stance – especially if the forward weather forecasts are benign – and the chances for higher futures prices this summer become slimmer.

But first the market will have to process another round of major USDA reports on June 30 with the acreage and quarterly stock estimates. There are some ideas that total corn acres could go lower after some regions experienced planting troubles in the spring, but so far there is no evidence that these reports might drastically change the market’s current thinking.