May Corn closed 12 ½ cents higher ($7.44 ¾), July 17 ¼ cents higher ($6.96 ¾) & Dec 17 ½ cents higher ($5.80 ½)
Fears that the 2nd season Brazilian corn crop continues to decline (ongoing dryness with not much moisture in sight) powers July corn above the $7.00 level. Late session profit taking took prices back down below the $7.00 level but still finishing the day with strong gains. New crop corn stands in despite what is perceived as a fast planting pace. Last week’s pace of planting may slow a bit this week due to rains around. If the Brazilian crop continues to deteriorate it places that much more importance on the success of the US new crop as we don’t have enough old crop to offset a Brazilian shortfall. New crop corn prices should stay strong to insure additional acres over and above what the USDA outlined in late March. Next week on Wednesday, May 12th, the USDA will give us their first look at the new crop S&D’s using the March 31st acreage and whatever the old crop carryout currently. One assumption is that they will use the yield and demand data they outlined at their February Outlook Conference. If true you can be sure the 2021/22 carryout projection will be rather bullish looking.
The interior corn basis continues to stay firm. Sure, there is some flip-flopping around between certain locations depending on who needs corn vs. who doesn’t. the nearby basis at the Gulf remains fully steady. The strongest time slots at the Gulf continue to be the June, July, and August.
Is the $7.00 level psychological resistance for the July futures contract? If it is it will not last if the trades’ perception of a shrinking Brazilian 2nd season corn crop continues. Most commonly used technical applications will suggest the corn market is in a legitimate overbought state. I won’t deny that but if the world is facing a dramatic shortfall in supply between now and when the US new crop is available get ready for some challenges of previously established precedent. If last week’s 3-day correction means anything now that we are at new highs $7.38 is the next upside target. We’ll talk new targets for Dec corn if and when it takes out last week’s high of $5.93.
Daily Support & Resistance – 05/05
July Corn : $6.84 – ???
Dec Corn: $5.75 – $5.93 (?)
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