USDA and EU Weather Disruptions Weigh on Grain Market

Sean Lusk, Vice President of Commercial Hedging at Walsh Trading, sees the grain market as range-bound until harvest. In his latest commentary, he notes that hot and dry weather in the western Corn Belt has led to a mild bump in futures early in the week, but forecasts calling for more rainfall than expected in August have put a damper on the rally.

Lusk estimates that around 50K contracts of corn have been sold back from Managed Money funds since Monday. He believes this is due to speculative liquidation caused by the prospect of upper Plains and western Corn Belt areas being salvageable despite the heat wave.

The USDA's recent drop in good-to-excellent categories for corn has caught markets' attention, with traders awaiting Monday's Crop Progress report for clues on the initial yield forecast. Lusk expects that the European Commission's cut to their corn production estimate by 8 million metric tons will lead to further cuts from the USDA.