December Corn closed 3 ¼ cents higher ($5.54 ¾), March 3 ¼ cents higher ($5.64 ¼) & May 3 ¼ cents higher ($5.69 ¼)
US – USDA increases US corn yield 0.5 bpa (177.0), increases production 43 M bu., increases ethanol usage 50 M bu., cuts carryout by 7 M bu. (1.493) – STU- 10.06% vs. 10.14% last month vs. 8.34% year ago
World – USDA increases carryin 1.88 M T., Increases production 6.4 M T., increases usage 5.61 M T., increases carryout 2.68 M T.
So – the corn yield is a bit higher than expected and the ethanol usage is not as great as expected leading to a less than expected drawdown in the carryout. So why the rally and higher close? It’s called the spillover effect from the higher wheat and soy. As far as I’m concerned this USDA data will not provide a clear direction one way or the other. The corn market will probably stay a trading range affair as it will get its day-to-day influences from both the wheat and soy markets as well as any cash market changes.
Basis levels from he corn processor continue to be firm while river locations not so much. The gulf is no great shakes either. Corn spreads ran mostly steady on the day within the crop year and old crop managed to eke out small gains vs. the new crop.
I am not viewing today’s USDA report as a game changer. I still believe we are going to see Dec corn drift down to the $5.40 level. I will admit it was interesting to see Dec corn hold just above its 50% retracement level. Longer term solid demand from the ethanol sector will keep our corn market alive but we will have to see an improvement in the export sector to see a sustainable rally.
Daily Support & Resistance – 11/10
Dec Corn: $5.48 – $5.60
March Corn: $5.58 – $5.70
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.