May Corn closed 15 cents higher ($6.95 ½), July 3 cents lower ($6.54 ½) & Dec 6 cents lower ($5.62 ¼)
USDA announces Corn Export Sales – 101.6 K T. to Unknown (50.8 K T. old crop, 50.8 K T. new crop)
First and foremost – welcome to the wonderful world of volatility!!! First notice day against the May corn contract is still two days away but it appears the delivery squeeze is happening as we speak. We know old crop corn in the US is tight due to ethanol demand and export demand. The 2nd season corn crop from Brazil is delayed and current growing conditions are not the best due to ongoing dryness. Add the aforementioned together and it creates the perfect storm for old crop corn for the mid-summertime frame. In the shorter term time frame flat price corn was unable to sustain the sharp rally in the overnight due to idea of a short term overbought. New crop corn sees the greatest set back from its nighttime highs as it appears planting may not be as adversely affected as recently thought; soils are warming and moisture does not appear to be too inundating in a widespread fashion. If any one area sees excessive moisture it appears to be the mid-south or the eastern Midwest.
Given the sharp rally in the futures market one might think the interior cash basis levels may begin to back off. I’m not seeing much evidence of that here in the US. The export market is steady while staying firm. The strongest slots at the gulf seem to be the June, July and Early august time frames. Needless to say old crop spreads will stay strong. I can’t imagine any corn deliveries against the May contract. Interesting to note that spreads are showing are bearish bias in the new crop. That has to be a combination of a late 2nd season corn crop as well as an increase in corn acres. The CEO of ADM suggests that we could see an increase of 5 million planted acres between corn and soybeans vs. the recent USDA forecast.
So – has flat price corn prices gone high enough for the time being? Today’s price action is indeed hinting at that. Everyone can see the new highs and closing lower (July forward as the May contract has moved into a world of its own). The intra-day price action is also trying to say enough for the time being as the bulls tried to defend the initial break early in the day but then to sag again late suggests it’s time for some correcting. I can’t say the party is over but to rally $1.00 a bushel in barely two weeks’ time does appear to be a bit excessive. New crop corn could correct the most especially if planting remains near a timely manner.
Daily Support & Resistance – 04/28
July Corn : $6.35 – $6.74
Dec Corn: $5.42 – $5.75
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