May Corn closed 6 ¾ cents higher ($3.60), July 6 cents higher ($3.68 ½) & Dec 5 ¼ cents higher ($3.86 ¼)
May Chgo Ethanol closed $0.008 cents a gallon lower ($1.312) & June $0.003 cents higher ($1.327)
Weekly Corn Export Sales – Old crop vs. 600 K – 1.000 M T. expected – New crop vs. 0-100 K T. expected
Too wet to plant and it looks like it may stay this way for a while if you believe the forecasts out there. Couple this with the heavy spec short and it leads to short covering. Flat price was strong overnight and again early in the day session. It tried to sell off when the soybean market was making its day’s lows but quickly rebounded when they bounced; new highs for the day were seen going into the close. If it stays too wet to plant past mid-month all sorts of “prevent plant” talk will begin to emerge. With this in mind the stage has been set for what I believe a decent rally. I say “decent” because the SA has a really big corn crop coming on.
The interior cash corn market (basis) continues with its bias higher from slow to non-existent movement. As long as the American producer can’t get into the fields to plant his new crop he is not going to sell any of his old crop. Bull spreads were working being led by the May contract despite the ongoing deliveries. It makes sense that bull spreads involving the July are working as that is where the majority of the spec shorts are. So here you have it – a strong basis and now a stronger looking flat price.
Charts are suggesting all systems are “go” for higher prices. The immediate short term down trend has been taken out. Daily momentum indicators read clearly higher. As long as forecasts continue to be wet the next upside target for July corn is the $3.75; the last interim rally high before the recent contract lows were set. As much as I feel the rally is about the wet weather impeding planting (new crop) the greatest concentration of the spec shorts are in the old crop; old crop will be your leader for now.
Daily Support & Resistance for 05/02
July Corn: $3.64 – $3.73 ($3.75)
Dec Corn: $3.82- $3.91 ($3.93)
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