July Corn closed 7 ¾ cents higher ($6.77), Sept 6 cents higher ($5.51 ¼) & Dec 7 ¾ cents higher ($5.40 ¾)
I believe we saw a new precedent set today; the July/Sept spread traded to $1.96 ½ over. The previous high was back in 2013 when the spread traded $1.56 ½ over. This is a result of lack of deliveries; meaning the shorts had no corn to deliver. Many are now questioning whether or not the Sept/Dec spread takes off. Back in 2013 the Sept/Dec responded only for a few days after the July expired. Back then the old crop carryout was round 700 M bu. and the new crop carryout was pegged in the neighborhood of 1.800 B bu. The is year is a bit different as the old crop carryout is pegged at 1.082 B bu. and the new crop is 1.432 B bu. It’s not quite the dramatic differences in carryout this year vs. 2013.
Short covering was the feature for the new crop picking up where it left off on Monday. I do think the strength in the July did have some minor spillover effect. Overall the trade is worried about forecasts for hot & dry to resurface in the west, northwest reaches of the Corn Belt ( western Iowa, the Dakotas and Minnesota). Current conditions are good for pollination but by later next week is when the fears are building. I’m not seeing any extremes in the near term for Illinois east.
It is my thought going forward that December corn will develop into a trading range affair as the bulk of the crop goes through pollination. For the time being I feel good about support being against the $5.00 level. I’m thinking resistance is somewhere between $5.50 and $5.60. I don’t see the gap made from July 2nd to July 6th being filled unless the weather takes a dramatic turn to the worst in the next two weeks.
Daily Support & Resistance – 07/14
Sept Corn: $5.40 ($5.35) – $5.60
Dec Corn: $5.30 ($5.25) – $5.52
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