The new high pressure dome sits over NM and W. TX. This looks to migrate NE over the next two weeks bringing above average temps back to the Midwest after the very very minor frost threat this weekend as far south as central IL. This is not a major ridge nor do long term models show any impact. A relatively benign weather forecast heading into the heart of planting. Look for record numbers on Monday’s crop progress report.

Open interest: Beans -238 a negative move, though slight, on an upside move is bearish. This shows there are willing sellers as it rallies. Corn +5576 with gains in CK evident. This is a total gain of 36K in three sessions…plenty of weak length hanging overhead. Wheat +8026 with big gains seen in May on the drop. I think this is fresh shorts. Meal +1041 and Bean Oil -3382 on the rally is bearish. This is short term money exiting.

Euro wheat was 1.00 Euro higher buoyed by a weak Euro helping export potential. Black Sea price spike and inflated US markets bodes well for France and Germany.

W. Australia is looking at a record 15 MMT production total. This is in spite of a wet finish and delayed harvest. 80% of this crop is earmarked for export.

Export sales came in as follows: Beans 436.7 TMT sold and 1.0002 MMT shipped. China took a massive 717.9 TMT this week. Their purchases were noticeably lower showing business may be moving to Brazil. Corn 1.0059 MMT sold and 686 TMT shipped. Mexico and Japan were the featured buyers. China snuck in and took 56 TMT of corn. Wheat 420.4 TMT sold and 479 TMT shipped. We sold a majority white wheat (239 TMT) with only 70 feed wheat sold. Meal 80 TMT sold and 50.5 TMT shipped. Oil 21.1 TMT sold and 22.7 TMT shipped.

There is a good system moving NNE from central OK and KS. The rains over the eastern halves of both states will help tremendously while the western third of KS and OK as well as most of TX miss out on beneficial rains. According to Intellicast estimates, West of Manhattan KS will remain dry while 70% of OK is covered with .50-2.5″. After this big system, look for a dry spell to move into the region for the next 10-14 days. Temps will cool but nothing dramatic to scare producers. Overall a good start in the eastern regions but that is not where they grow the high protein wheat in KS.

The above map is the Intellicast 30-day precipitation versus normal forecast. After the current system hits eastern KS, NE, OK and CO there is little seen for the next 10-days for the western half of the HRW region. I agree that the eastern, especially the NE region will look good after this system but the SW region is another story. The 30-day estimates point to no help for TX and into SW KS making the HRW crop questionable still.

The 6-10 day precipitation map shows no real change with a moderate amount of rains added to the Dakotas. The South remains the problem with anything south of I-80 still seeing spotty fields. There is plenty of time for beans to recover and develop their third bean per pod but corn remains a very questionable situation heading into the WASDE report.

The news out of Texas continues to be bad:

From NPR:

“The drought has spread over much of the southern U.S., leaving Oklahoma the driest it has been since the 1930s and setting records from Louisiana to New Mexico. But the situation is especially severe in Texas, which trails only California in agricultural productivity.

McGee is still watering another variety of corn, cotton and sorghum but the loss of nearly one-sixth of his acres after spending so much on irrigation weighs on him.

“Kind of depressing,” the 34-year-old farmer said. “You use that much of a resource and nothing to show for it. This year, no matter what you do, it’s not quite enough.”

About 70 percent of Texas rangeland and pastures are classified as in very poor condition, which means there has been complete or near complete crop failure or there’s no food for grazing livestock. The crop and livestock losses could be the worst the state has seen — perhaps twice the previous single-year record of $4.1 billion set in 2006, said David Anderson, an economist with Texas AgriLife Extension Service.”

Looking at the above map, you see a mild increase in the expected rains about 5-7 days out with the end of July looking wetter today than at any point in the last week. Heat remains through the weekend then it moderates to a degree with most of the major growing areas looking for upper 80s with the SE growing region looking the hottest with temps expected in the 90s 5 of the next 10 days. Rain events will focus on the northern growing regions with Des Moines looking at 3 rain events by month end while Cincinnati looking at 3 rain events. Minneapolis is looking at 4 rain events showing the rains are focused north, not south. Moving into S. IL, MO, KS, AR and LA remain a problem with crop ratings in all those states expected to take another dive on Monday’s report. Overall it is less threatening but not good yet for crops.

Markets look to explode higher today as overnight maps enhanced heat and removed rains.

From Reuters:

 The health of U.S. corn and soybean crops deteriorated more
than expected last week as temperatures heated up in key growing
areas and stunted development of late-planted fields.
    After the market closed on Monday, the U.S. Agriculture
Department's weekly crop condition report showed that the U.S.
corn crop was rated 66 percent good to excellent, down 3
percentage points from the previous week.
    The decline in corn ratings was the biggest weekly drop in
three years.
    Soybeans were rated 64 percent good to excellent, 1
percentage point below analysts' expectations and 2 percentage
points below a week earlier. The 10-year average for this time
of the year is 61 percent good to excellent, and USDA rated the
crop 67 percent good to excellent a year ago.
    High temperatures in the 90s Fahrenheit or more along with
high humidity were expected throughout the Corn Belt this week,
but the high pressure ridge was seen breaking down on Friday,
according to the latest forecasts.
    The crops, however, remain vulnerable to extreme
temperatures. Severe heat during corn pollination, which
normally occurs in late July, can diminish yields.
    Soybeans, which are also widely grown in the Midwest, are
still a couple of weeks from their critical pod-developing
stage, but the forecast for little precipitation in July is
supportive for the market.

The USDA just released the monthly WASDE - download the pdf here: http://www.usda.gov/oce/commodity/wasde/latest.pdf

Excerpts:

U.S. wheat supplies for 2011/12 are raised 90 million bushels as higher carry in and production more than offset reductions in imports and higher use. Beginning stocks are raised 52 million bushels mostly reflecting higher estimated carryout for 2010/11 as reported in the June 30 Grain Stocks report. Production for 2011/12 is forecast at 2,106 million bushels, up 48 million from last month as higher winter wheat production and higher forecast yields for durum and other spring wheat more than offset lower area as estimated in the June 30 Acreage report.

U.S. feed grain supplies for 2011/12 are projected higher this month mostly with higher expected beginning stocks and production for corn. Corn beginning stocks are raised 150 million bushels reflecting changes to 2010/11 usage projections. Corn production for 2011/12 is projected 270 million bushels higher based on planted and harvested area as reported in the Acreage report.

Soybean production is projected at 3.225 billion bushels, down 60 million due to reduced harvested area.

LONDON, June 22 (Reuters) - China is expected to import up to five million tonnes of corn in 2011, the U.S. Grains Council said on Wednesday. Speaking on the sidelines of the Agriculture Investment Summit, USGC president and CEO Thomas Dorr said China has already purchased around 1.25 million tonnes of corn this year and was expected to meet the bulk of its 2011 import needs from the coming 2011-12 new crop.