Corn Finally Catches a Weather Break in the U.S.

(Bloomberg) -- After a cold, soggy start to the summer, it’s finally feeling like summer in the U.S. Midwest, and corn fields are recovering.

A turn toward warmer weather should be beneficial for the battered crop, and government data signal that conditions are starting to bottom out. The changing weather also means that investors are tapping the brakes on their bullish bets after prices took a spectacular ride higher.

Key growing areas are likely to stay warmer and drier this week, helping the crop catch up to normal growing stages after the heavy rains caused record planting delays. Corn’s rally has started cool off after futures in the second quarter surged 21%, the best such performance since 2014. The contract for December delivery fell for the first time in five days in Chicago on Tuesday.

U.S. crop ratings rose by 1 percentage point to 57% good or excellent, the Department of Agriculture said on Monday, matching expectations from analysts surveyed by Bloomberg.

Meanwhile, money managers are feeling less positive on the market. In the week ended July 2, the investors’ net-long position dropped 3.3% to 181,648 futures and options, according to U.S. Commodity Futures Trading Commission data. The figure, which measures the difference between bets on a price increase and wagers on a decline, was the first loss in seven weeks.

Short-only holdings jumped 7.3%, the most since April.

Corn prices tend to fade seasonally at this time of year as the North American harvest approaches. Some traders may be cutting their longs until more information is known about the size of the crop, Brian Hoops, senior market analyst at Midwest Market Solutions in Springfield, Missouri, said by phone.

The USDA will release a monthly supply and demand report on Thursday. Analysts expect the agency to trim its outlook for both domestic corn and soy production. However, the USDA is also conducting an additional survey this month on plantings -- those results won’t be published until Aug. 12.

“Historically, they don’t want to be long after the Fourth,” Hoops said of fund corn positions following the U.S. Independence Day holiday on July 4.

“The caveat is we don’t know what the planted acres are,” he said. Estimates are coming in at a “wide range.” The final figure “could really influence our ending stocks and, in turn, our prices,” Hoops said.

To contact the reporter on this story: Michael Hirtzer in Chicago at mhirtzer@bloomberg.net

To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net, Millie Munshi, Steven Frank

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