May Corn closed 3 ¾ cents higher ($3.31 ½), July 3 ¾ cents higher ($3.37 ¼) & Dec cents 2 ¾ cents higher ($3.51)
April Chgo Ethanol closed $0.003 cents a gallon higher ($0.866), May $0.003 lower ($0.903)
Who said corn has to go down every day? Short covering was the MO for the day on Tuesday. I think most of the buying was inter-market spread related against Chgo wheat. For what it is worth there are some China rumors around. Poet announces they are idling 4 ethanol plants. We will get reminders of the poor margins/slowdowns in the ethanol sector with tomorrow’s EIA report. The USDA announced they will revisit last year’s acres in states that still had corn standing this winter if warranted. I’m wondering if today’s rally in corn may have gotten some help from the livestock sector’s rally. There’s two ways to look at the rally in livestock – animals are backing up due to the slowing of processing and they need to be fed. If the back-up lasts any length of time retailers will be faced with higher prices. Bottom line to today’s corn price action – just some short covering.
The interior corn basis doesn’t do a whole lot. The processor basis stays depressed looking. River locations flip-flop around based on where is needed vs. where it’s not needed. The gulf is most steady with recent postings. Bull spreads were working with the flat price short covering.
I’m calling today’s technical price action just some short covering prompted by the idea nearby corn futures are holding suspected long term support levels, the mid high $3.20’s. On Thursday the USDA will update supply-demand. Average trade guesses are expecting to see a hike in the US corn carryout of just over 100 million bu. and a world corn carryout increasing by just over 1.0 M T. this is due to a drawdown in corn usage for ethanol and maybe a slight hike in feeding. I’m not sure they will adjust exports even though we are running a bit ahead of previous USDA projections.
Daily Support & Resistance – 4/08
July Corn – $3.33 – $3.42
Dec Corn – $3.47 – $3.54
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