Coming back from the weekend it's game on again for bulls. It’s all about weather with only a modest break in temps seen over the weekend. Spotty rains in central IL and IN offered some fields 1” while their neighbor got a tenth. The erratic weather pattern continues to such an extent I’ve seen private estimates as low as 139 for corn. On Friday Informa lowered their estimate to 153.5 about matching Goldman Sachs and CropCast. Using current harvested acreage we get a 13.6 billion production. Current usage is estimated at 13.77 billion. Something has to give here. There are a few in the mid 140s with LanWorth in that category with this a distinct possibility if rains do not start in the latter half of July. My point here is the USDA has no choice but to lower yield on this Wednesday’s WASDE report. The damage is done in many areas with irreparable harm dramatically lowering yield.

Looking to demand, as price moves higher due to supply problems there is chatter of changes to the Ethanol mandate. This is just a discussion but at some point they have to face the reality that current blend levels are unreachable unless corn prices break or crude rallies significantly. Outside of Ethanol, feed margins are negative across the board stalling or contracting Chicken, Hog and Cattle operations. The one bright spot for demand is Japan. They need to cover 4-5 MMT of feed demand in the 4th quarter alone. Historically they are 30-40% covered. This coupled to possible Chinese demand is the bright spot. The situation with corn is pretty rough. Photos I have seen from clients and on Twitter show very stunted and spotty fields. There are a few bright spots but a few great fields will not cover the losses in numerous scarred fields. Look for crop progress today to drop ratings another 3-5% offering a bullish catalyst into the numbers. The COT comes out after the close which should show a massive gain in corn after solid gains in OI this past week. Estimates are currently around 125K long.

Then the USDA numbers on Wednesday morning. I expect the USDA to raise old crop stocks slightly while cutting demand due to price spikes. This is their attempt to quell a firestorm with a water gun. Nothing can stop this onslaught except drenching rains which there are none forecasted. Do not look for the USDA to lower yield to reality but a number under 160 is very possible. They will lower it and use their lower harvested acreage but a number under 160 alarms everyone because it will show a steep negative trend.