July Corn closed 12 ¼ cents higher ($3.38 ½), Sept 12 ¾ cents higher ($3.41 ½) & Dec 15 ¾ cents higher ($3.50 ½)
July Chgo Ethanol closed unchanged ($1.200), August $0.050 cents a gallon higher ($1.205)
Why do we even try to second guess what the USDA may have to say? The USDA cuts planted acres by 5 million (the trade was expecting a cut of 1.8 million acres), cut harvested acres by 5.6 million. The USDA goes on to say that this report includes 2.2 million acres that haven’t been planted yet. The report was based on data from the respondents between May 30th and June 15th. The Quarterly Stocks report was another “jerk-around” at 5.223 billion bu. (the trade was expecting 4.955 billion bu.). On the surface the acreage data suggests supply could be cut by nearly 1.0 billion bu. The higher than expected Stocks number suggests the carryin might increase by 200 million bu. Add it all up using the present yield of 178.5 bpa we could see the carryout come much closer to 2.5 billion bu. if not lower. We are currently looking at a threat of “hot & dry” developing through the first half of July. If it persists yield will most certainly come down. In other words we are going to live or die with each forecast for the near term. We went into this report with a great concentration of spec shorts. They now have to be seriously reconsidering this position. If the upcoming holiday weekend is indeed “hot & dry” and forecasts suggest it will persist I have to think we’ll see quite a rush to the topside.
So with all of this said the initial target could easily be the 200 day MA which comes into play at the $3.76 level basis the December contract.
Daily Support & Resistance – 7/01
Sept Corn: $3.35 – $3.50 ($3.60)
Dec Corn $3.45- $3.60 ($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.