March corn closed ¼ cent lower ($3.84 ½), July ¼ cent lower ($3.97 ¾) & Dec unchanged ($4.00)
February Chgo ethanol closed $0.007 cents a gallon lower ($1.353), March $0.007 cents lower ($1.372)
Flat price corn consolidates inside of Monday’s break. The biggest news of the day was a report out of China that they will not change their import quotas for corn currently set at 7.2 M T. They basically said this was a global quota and they would not adjust it for a specific single country. At the last USDA world update they pegged China for taking 7.0 M T. There continues to be talk about a cut in corn production out of the Brazilian state of RGDS. So far suggestions are ranging for a loss of 1.0 -1.5 M T. This would be part of Brazil’s 1st season corn crop. It is generally thought that Brazil’s 1st season corn crop accounts for 1/3 of its total production. Estimates are now out for the various USDA reports scheduled for Friday. The average trade guesstimate has corn production declining by 148 million bu. and carryout declining by 153 million bu. I’m thinking the carryout decline will not match the production decline due to the possibility of the USDA lowering export projections given the slow start to the marketing year.
The interior corn basis ran steady to slightly easier on Tuesday. The easiness was seen at a couple of interior river locations. Processors continue to show the best basis. I have to question how long this will last given the declining ethanol margins. The midday posting for the Gulf ran unchanged with last night. Corn spreads ran fractionally mixed on the day.
As much as Monday’s trade in corn registered an interim sell signal I would be surprised to see much more downside until we see what the USDA has to say on Friday, the 10th. FYI; major index fund rebalancing starts tomorrow and that should prompt some minor amounts of corn selling.
Daily Support & Resistance for Jan 8th
March Corn: $3.81 ½ – $3.88
July Corn: $3.94 ½ – $4.01
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