We continue to see a wide range of U.S. corn yield estimates. Some analysts have the average yield as low as 150 bushels per acre, while others have it as high as 160.

It appears as though trade is using the higher end of these estimates in new-crop corn price discovery. Even with elevated corn demand predicted next marketing year, trade is expecting U.S. corn reserves to almost triple from this year because of these higher yields.

There are economists who believe U.S. corn stocks-to-use will reach 12 percent this year. If correct, this would equate to corn futures closer to the $4 level on new-crop, if not below. While this seems negative, there is little doubt we would see at least some rebound in corn demand at a price that low.

The one trade will monitor the closest is China, which is currently shopping for corn in the global market, even at today’s values. This interest in U.S. corn from China is raising some questions in the market.

The USDA currently projects Chinese corn imports of 7 million metric tons (mmts) for this marketing year. After recent buying activity, some analysts are claiming corn imports will be closer to 10 mmts. Much of the Chinese business has been new-crop, though, where the United States has a more plentiful corn supply forecast.

It is quite possible old-crop corn demand may be underestimated at present. Ethanol manufacturing continues to run above predictions indicating 25 million-50 million bushels more corn use than used in balance sheets. Export sales on corn are also topping trade projections by 15 million bushels.

While these overages are minimal, they still indicate a tighter balance sheet than trade is using. The same scenario is true for soybeans.

We already know old-crop soybean stocks will be minimal this year, and possibly dip below 100 million bushels. Given recent export demand, new-crop soybean demand may be underestimated at present. New-crop soybean values are not reacting to elevated usage, though, as global production is expected to rise enough to satisfy a higher demand base.

While this spring and early summer weather has been perceived as less than perfect, it has been beneficial for Midwest soils. Iowa is now reporting subsoil to be fully charged on moisture. Even with regional acreage losses from the wet spring, this ample moisture in the state is giving trade the indication of higher yields.

This rebuilding in soil moisture does not mean trade is still not concerned with weather conditions. Trade knows that in a short amount of time Midwest soils can go from adequate moisture to a shortage, especially at this point of the growing season when the corn starts to use more water.

There are also states still deficient on moisture, such as Nebraska, where subsoil is reported at 58 percent short. This is keeping an elevated amount of risk premium in today’s corn values.

U.S. field scouts are already reporting Asian rust fungus in Southern soybean fields. So far, cases have been reported in 30 counties. What is concerning is that these cases are coming roughly three weeks ahead of normal.

Agronomists are advising soybean producers in the remainder of the United States to scout fields actively for rust signs, and treat fields immediately as a result.

Karl Setzer is a commodity trading advisor/market analyst at Maxyield Cooperative. His commentary and market analysis is available daily on radio, in newsprint and on the Internet at www.maxyieldcooperative.com

The opinions and views in this commentary are solely those of Karl Setzer. Data used for this commentary obtained from various sources are believed to be accurate.

This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position.