March Corn closed 20 ¼ cents higher ($6.09 ½), July 16 ¾ cents higher ($6.06 ½) & Dec 8 ¼ cents higher ($5.55 ¾)
Despite another round of scattered moisture for the dry areas of Brazil and Argentine prices vaulted higher on Tuesday. On the weather front it looks like the near term forecasts for the dry areas of concern are dryer vs. wheat they were suggesting yesterday. Longer term forecasts, after mid-month, look to be almost beneficial with scattered moisture every few days. Bull spreads were working like gangbusters not only within the old crop but also the old crop vs. the new crop. The strength in the spreads are suggesting business but I’m not seeing it being reflected in the midday gulf basis. The push higher in crude oil prices helps but it sure looked like something else was behind the bull spread push. In the background I’m wondering if we are looking at some influence from inflation. “Smart guys” are suggesting 3 interest hikes this year. Years and years ago grain markets were once perceived as a hedge against inflation.
I’m not seeing any major changes with the interior corn basis. River locations run steady to better while the midday posting at the gulf was fully steady with last night. Corn processors appear to be posting steady to slightly better bids at well. As much as it seems basis levels are standing in I’m not seeing the cash market rationale for the bulge in corn spreads today. I understand the “what if” if SA has a short crop but we are a long way away form that happening. As I mentioned earlier it looks we did some unannounced export business.
Yesterday I talked about last week’s suggested downside reversal still being valid. That idea is almost out the window now. If we are indeed trading SA weather makes me think something a bit closer to contract highs is in the cards.
We should start seeing trade estimates roll out in anticipation of the USDA on the 12th. These reports will finalize last season’s production and acres, update global production, update both domestic and global demand and finally give us ideas on 1st quarter usage.
Daily Support & Resistance – 01/05
March Corn: $6.00 – $6.18 (?)
July Corn: $5.98 – $6.16
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