May Corn closed 9 ¼ cents lower ($6.86 ¼), July 10 ½ cents lower ($6.44) & Dec 15 ¾ cents lower ($5.46 ½)
Weekly Ethanol Grind – 4/23 – 945 K bpd vs. 941 K week ago – Stocks – 19.7 M bbls vs. 20.4 M week ago
Weekly Corn Export Sales – old crop vs. 400 K – 1.000 M T. expected – new crop vs. 100-600 K T. expected
How does one describe today’s grain trade – how about “Rock & Roll”? During the Tuesday night session July corn trades 25 cents lower; during the Wednesday day session July corn trades 16 cents higher. The end result was 10 ½ cents lower. I did not see a lot of new news to directly impact old crop corn other than the “pre-delivery” squeeze in May corn that was seen earlier in the day. I’m not sure the May/July corn spread has ever traded 63 cents over. Like the flat price, however, that rally also failed to sustain itself by day’s end. Given where interior cash prices are we should not see any deliveries. With that said the fireworks type price action in the spreads should continue. Not only will the tightness in the US crop add to the volatility but so will the less than desirable condition of the 2nd season corn crop in Brazil. Weather forecasts for that crop do not offer any warm and fuzzies.
New crop corn saw similar price action but the result here were slightly greater losses. I’m not seeing any major speed bumps in the weather forecasts that would impact planting for any sustained amount of time. If true that should get us additional corn acres. Just how many more remains to be seen. If planting does indeed move along unimpeded the highs we saw Tuesday just may be it for a while.
So here we have a tight old crop corn scenario that’s not going to go away any time soon and the possibility of an increasing in size new crop. This tells me the craziness in the old crop/new crop spreads are far from being over.
The short term inter-day price action suggests we could see additional downside correction beyond the lows we saw Tuesday night. That break was bought but the ensuing rally failed to sustain itself. That tells me we still have some further vulnerability to the downside.
Daily Support & Resistance – 04/29
July Corn : $6.30 ($6.20) – $6.60
Dec Corn: $5.30 – $5.58
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.