December Corn closed 9 cents lower ($5.64), March 9 cents lower ($5.72 ¼) & May 9 cents lower ($5.76 ½)
Weekly Ethanol Grind (as of 10/29) – 1.107 M bpd vs. 1.106 M bpd week ago – Stocks – 20.1 M bbls vs. 19.9 M bbls week ago
Weekly Corn Export Sales – old crop vs. 700 K – 1.400 M T. expected – new crop vs. 0-20 K T. expected
Wednesday brings another round of profitaking of the recent 75 cent rally. Lower wheat prices coupled with lower energy prices were a primary catalyst. The weekly ethanol grind was another stout number but stocks did increase. It should be noted that the recent big grind margin has begun to slip suggesting going forward the grind may taper off some. Adding to the selling was another reputable research firm suggesting this year’s corn yield is 178.7 bpa; 2.2 bpa larger than what the USDA suggested in October. If true and the USDA leaves harvested acres unchanged this figure would more than offset the increase in the ethanol grind. Personally I don’t think the USDA would adopt an increase this big on this report preferring to wait until the January final. Another factor in today’s sell off is the idea fields in the central Midwest may have seen enough drying for harvest to resume in the next couple of days.
Most interior cash corn markets (not all but most) are reading steady to easier. The gulf too reads easier. This all suggests an increase in the movement of cash corn. Corn spreads within the current crop year ran steady upfront to a shade easier vs. the summer months. Old crop gave back a chunk to the new crop. Russia talks about enacting a 6 month quota on fertilizer sales beginning in January. Russia is one of the biggest exporters of fertilizers but I’m not sure how much comes to the US. Here in the US there is a lot of talk about high input prices for the new crop and whether or not the US producer will cut back on his normal usage of such inputs.
Monday afternoon I talked about the corn being ripe for a technical downside correction; here it is. From the Tuesday morning high to today’s low we’ve seen a 23 cent correction. Tomorrow we will look at the export sales report to see if it offers any improvement in recent sales. With harvest getting back at it and some of the “smart” guys suggesting a noticeable yield increase for next Tuesday’s USDA production report I’ll be happy with some stability following the recent sell off. If the USDA does go along with some of these yield increase ideas on this report it will suggest the recent 75 cent rally is over and Dec corn will be looking at an initial downside of $5.40.
Daily Support & Resistance – 11/04
Dec Corn: $5.58 – $5.70
March Corn: $5.67 – $5.79
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