Dec Corn closed 3 ½ cents lower ($3.67 ¾), March 3 ½ cents lower ($3.77 ¼) & July 3 ¾ cents lower ($3.96 ½)
December Chgo Ethanol closed 0.016 cents a gallon lower ($1.414) & Jan $0.018 cents lower ($1.892)
USDA announces 132.0 K T. of corn sold to Unknown
Weekly Corn Export Inspections – 637.4 K T. vs. 400-700 K T. expected
Weekly Corn Crop Progress – Harvested – 76% vs. 77% expected vs. 92% 5-year average
It’s the same story but a different day; less than needed demand and a lack of competitiveness in the world’s export circles. Flat price registers a two month low as well as a two month low close. One of the functions of lower prices is to stimulate demand. Unfortunately that has yet to occur. If I had to guess what’s driving prices lower are a lot of high priced short puts coming to expiration on Friday. These short puts were established this summer when prices were moving higher from the extended planting delays. What people weren’t counting on back then was that demand for US corn would go in the sewer totally offsetting the idea of a short crop due to delayed planting. Even the extended harvest delays were unable to prop up prices. I’m told a fair portion of this year’s crop is of poor quality. This further aggravates the problem as no one really wants poor quality corn and poor quality corn gets additional discounts in price when sold.
The “overall” interior basis continues to be firm but there are some locations seeing some easing. Cedar Rapids is looking at some minor easing as are some Illinois River locations. The Gulf however continues to be firm. The overall firm basis is not doing much for the nearby corn spreads as they run mostly unchanged within the current crop year. The 2019/20 crop year continues to lose to the new crop. It is my thought that the soft looking spreads are a result of option expiration due at week’s end.
Needless to say its ugly price action. flat price corn has been trending lower for just about one month. $3.64-$3.63 is the next support level for Dec corn. This would put prices just into the gap (created when Sept corn went off the Board) on weekly charts; $3.65 ¾ to $3.58 ½. I wish I could say daily price charts are oversold but they are not. The shorter term inter-day charts are only showing a minor degree of oversold despite the ugly performance over the past two days.
Daily Support & Resistance for 11/19
Dec Corn: $3.71 – $3.80
March Corn: $3.80 – $3.89
The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results.