Corn Commentary


Corn – Just My Opinion

May Corn closed 5 ¼ cents higher ($3.23 ¾), July 3 ¾ cents higher ($3.22 ¼) & Dec1 cent higher ($3.35 ¾)

June Chgo Ethanol closed $0.009 cents per gallon lower ($1.106), July $0.009 cents lower ($1.102)

CONAB suggests Brazilian corn production is 102.3 M T. vs. 101.9 M T. in April

Highlights of USDA US Supply-Demand Report – Old Crop – lowered production by 29 million bu., increased feed usage by 25 million bu., lowered ethanol usage by 100 million bu., increased exports by 50 million bu., increased carryout by 6 million bu. – New Crop (year to year) – increased production by 2.332 billion bu., increased domestic usage by 595 million bu., increased exports by 375 million bu., increased carryout 1.220 billion bu.

Highlights of USDA World Supply-Demand Report – Old Crop – increased carryout by 11.56 M T. – New Crop (year to year) – increased production by 73.8 M T. – increased carryout by 24.9 M T.

In my opinion what we saw after the USDA data was a classic “sell the rumor – buy the fact” scenario. Okay – the old crop carryout projection came in less than expected as did the new crop carryout projection. My question is where are you going to go with 3.318 billion bu. carryout. The smart guys will tell you the acreage figure is too high and it will come down as we move forward. How much will it come down; 1 million acres, 2 million acres how about 3 million acres? Even if it comes down 3 million acres coupled with what looks like a good yield the projected carryout will still be a high 2 billion plus carryout. It looks like to me we saw the shorts coming out of the old crop and laying it off in the new crop.

The interior cash corn market (basis) still shows an underlying firm tone. CR was the only location that saw some basis easing. The Gulf market holds firm as well. As I mentioned we saw some decent sized bull spreading as the trade shorts came out of their old crop and rolled into the new crop. Now we get to guess where the producer will start letting go of his old crop. Will it be against the mid-low $3.30’s July or will it be closer to $3.40.

Today’s price action clearly shows the corn market is done going lower for the near term. It is my opinion the spec trade just got too short. If you want the market to move lower we need to clean out some of these shorts first. As of this writing the mid-low $3.30’s (July) represents the first major hurdle of resistance.

Daily Support & Resistance – 5/13

July Corn $3.18 – $3.26

Dec Corn $3.31 – $3.40

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