May Corn closed 24 ¾ cents lower ($7.48), July 20 ½ cents lower ($7.11 ¾) & Dec 27 ¼ cents lower ($6.09 ¼)
USDA announces Corn Export Sales/Cancellations – 1.020 M T. new crop sold to China – China cancels 280 K T. old crop
Weekly Corn Export Inspections – 1.707 M T. vs. 1.100-2.200 M T. expected
Feed grains get hammered on Monday. Old crop corn gets sold from profit taking ahead of the USDA on Tuesday as well as another old crop corn cancellation from China. China did buy another 1.020 M T. of new crop but that fell on deaf ears due to the perceived pace of planting of the new crop. With planting advancing at such a rate and weather looking non-threatening the idea is that we are garnering more acres over and above what the USDA alluded to on March 31st. Adding to all of today’s selling pressure in the corn market was the wheat market falling flat on its face. The idea that the Brazilian 2nd season corn is continuing to deteriorate did not get much traction today as the focus was mostly on the pace of planting for the US new crop. The weather in Brazil continues to be dry and forecasts suggest that is not changing.
Interior cash markets continue to be strong despite some minor flip-flopping where locations need corn vs. others that don’t need it. The Gulf has gone to basis July and the roll was done in line with the May/July spread. I believe the bull spread (old crop to new crop) should continue to work as long as the new crop is not threatened.
History suggests any time from May to early July existing bull markets in corn tend to run out of steam. With nothing threatening on the horizon to the timely planting of the new crop we could be very well looking at a top. On Wednesday the USDA will update old crop supply demand; it is expected to tighten. I’m not sure anyone will believe the new crop numbers given the idea acreage is expected to increase noticeably between now and the end of June. It will be interesting to see how the trade reacts to a bullish looking new crop number.
The trade was anticipating the pace of planting to be 67% completed. That’s exactly what they got. This compares to the 5-year average of 52% completed and 65% one year ago. Corn emerged is at 20% vs. the 5-year average of 19% and 22% one year ago.
Daily Support & Resistance – 05/11
July Corn: $6.98 – $7.25
Dec Corn: $5.90 – $6.20
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.