Corn Commentary


Corn – Just My opinion

May Corn closed 10 ¾ cents lower ($3.44), July 8 ½ cents lower ($3.50) & Dec 4 ½ cents lower ($3.62 ½)

April Chgo Ethanol closed $0.040 cents a gallon lower ($1.028), May $0.047 lower ($1.036)

As much as I would like to say the Ag markets are moving away from the “total risk off” mentality the corn market was left out in the cold. The problem with corn is the ethanol market and its sinking prices. As gasoline prices sink ethanol prices have to keep pace. Lower ethanol prices mean less profit for the processor if corn prices don’t follow suit. One has to remember that Ethanol usage accounts for one-third of our corn usage. The US corn producer cannot afford a major slowdown in the corn grind. Adding insult to injury is the US dollar spiking higher making US origin that much more expensive when comparing to Black Sea origin and or SA origin.

Interior corn prices (basis) if not steady are lower especially to the processor. The corn export basis is also easing. During the recent break corn spreads have been easing; today they got blasted. A prominent investment house, GS, suggested that the corn market was the best short in the Ag sector.

Yes, the old crop corn market is registering a slight degree of oversold. Unfortunately corn prices are following energy prices and they will continue to go lower as long as World prices are moving lower and if the nation as a whole goes into a lockdown. The price action is horrendous. I personally am not looking to be a hero at this point and pick a bottom. The market may be deserving of a bounce from a technical standpoint but I’m not willing to trade in anticipation of one happening.

Daily Support & Resistance – 3/18

July Corn – $3.43 – $3.58

Dec Corn – $3.55 – $3.70

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.