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MACRO MARKETS | The UK will vote on Thursday if they want to leave the EU. It is going to be close. If the UK votes to leave the market is expected to sell off. If the UK votes to stay the market is expected to trade higher. This is not a time to leverage up to your eyeballs. Currency markets have the potential to be very volatile as does the stock market and bonds. Be careful!
WEATHER | Weather in the US had changed for the better as forecast show more precipitation and cooler weather across the US. June and July tend to be the most critical weather times of the growing season for corn because that is when pollination usually occurs. Soybeans are more sensitive to extreme hot and dry weather later in the summer. Big take away for latest weather models is conditions look to be getting better for corn.
CORN | Dec Corn traded limit down today. We ended up close just above the lows but there was a point we were limit down. The COT report that is released on Friday will be based on positions of the close today, so it will be interesting to see how much the funds liquidated their large net long position. Without weather issues it will be hard to justify another run at $4.50 Dec Corn. This is what we are looking at for the corn market over the next few weeks
- Projected weather should put the national yield close to the 168 trend line the USDA is using for production estimates
- Will corn exports continue to be robust? The US seems to increasing export sales at the expense of South America
- Will the USDA acreage report show less corn acres? I think we can see more acres come out of Prevent Plant than expected and that could keep US corn acres steady even as Soybean acres increase.
- Will the USDA June 1 Stocks report show less feed usage and therefore higher stocks? I think we could see a bearish surprise as more feed demand goes to HRW Wheat (KC Wheat). We shall see…
In the meantime it looks like Corn is reversing on the charts. Time is starting to run out for corn and higher prices. Without a new weather scare in the next couple of weeks the corn market will be limited to demand side rallies only.
I think support for corn comes in at $4.05 and then $3.90. Major resistance will be $4.50, which signifies a double top when you look at a chart going back to the highs of CZ6 in 2015.
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