** USDA  pegged 2017 corn acres at 90.9 mil, off over  -3 mil yr/yr. Some prevent plant/failed acres likely.
** World 16/17 corn carryout at a record high, but not quite as burdensome  when  compared to use.
** Argentina  & Brazil safrinha  corn harvest on-going into July.   Record crop(s).
** Ethanol margins slightly profitable.  Livestock volatile, but hogs/cattle viewed profitable.
** Corn importers shifting their business to South America, particularly deeper into summer/autumn.
** Fund net  position  close to net even to start the week.

Overnight,  the  corn  market  started  weaker,  initially  extending  those losses to trade as much as 5-6
lower, though traders pared it back into the AM break to just 2 cents lower.  Without a doubt, Mother
Nature  remains  in  the  driver’s  seat  from  a  price  discovery  standpoint.    U.S.  crop  weather  during  the
weekend was tranquil across most of the Corn Belt, with few showers/precip to speak of.  Temps were
mostly  in the 70’s  and  80’s  during  the  day  and 50’s and  60’s  at  night (with  a  few venturing  closer  to
70’s).  One notable exception to this was North Dakota, where the center part of the state received very
welcome  rains. Such  areas  could  receive  a  bit  more  of  a  respite,  with the  five  day  precip  maps
suggesting ~1 inch rain coverage for the Dakotas into Wisconsin, with a band of 3-4 inch totals possible
along the IA/MN border.  Million dollar rains should they verify?  The SW quadrant of the Belt will likely
go  without,  however  – welcome  in  soggy  MO,  but  not  so  much  in  dry/drying  Kansas  and  SW  Iowa.
Condition  reports  tonight  are  expected  to  show  mixed  feature;  further  deterioration  in  the  West  is
likely, while the East could improve on the recent rains there.  On the world scene, portions of Europe
and East Ukraine remain too dry, while South America benefits from good harvest weather and West
Ukraine  gets  welcome  rain. Brazil  safrinha  corn  in  major  state  Mato  Grosso  reported  62%  cut.
Argentina still slogging along at ~2-3% per week and is closing in on 60% harvested of first/only crop.

Wild and violent summer weather swings continue.  At current levels, we  would rather be long than
short from a fundamental standpoint, though tech momentum is  currently swinging in favor of the
bear. Defined risk strategies should be the order of the day.  Aggressive traders can scale-down buy
futures and  own puts to hedge it up.  Cautious traders should consider buying $5 CZ Calls for  ~2 cents.

The corn market managed to find its footing Friday after a knee buckling Wed-Thurs break, closing six
cents higher.  Corn managed to stay in the green all day; the markets featured a noticeable “wobble”
mid-day, but found some short-covering to lift values back near the days’ highs into the close.  For the
week, corn still closed 17 cents lower despite the Friday bump.  Cash corn trade was quiet to end the
week, as all participants involved likely just wanted to go home after an exhausting week.  CFTC data  Fri
PM found larger-than-expected fund buying in corn in the sessions leading up to the July crop report.
Managed  Money  traders  purchased  a  net  148,000  contracts;  38,000  were  new  longs  in  the  market,
while 110,000 was covering existing shorts.  Even when  including the post-report sell-off Wed-Thurs,
this should leave funds dangerously close to flat the market heading into the weekend.  Clearly, the turn
in the forecast and the absence of bullishness in the July report made some fund managers change their
tune yet again?  Ultimately, the ethanol industry was the “big winner” from this week’s negative price
action in corn.  Solid physical ethanol trade implied most of those corn price declines went straight to
the bottom-line.  We would estimate average Midwest ethanol margin at about 25-35 c/bu, or 10-12
c/gal, including all costs and cash inputs, which is a one month high.