Dec closes 13 ½ cents lower ($3.40 ¾), March 13 cents lower ($3.49 ¾) and July 13 cents lower ($3.64 ¼)
December Chgo Ethanol closes 0.1 cents a gallon lower (1.554), Jan 0.1 cents lower (1.498)
Highlights of the USDA Corn Production/SupplyDemand Report – US – Yield increases 1.9 bpa leading to production increase of 169 million bu. – domestic usage increased by 85 million bu. – exports left unchanged – projected US carryout increased by 83 million bu. – World – projected carryout increases by 1.38 M T.
Weekly Corn Export Sales – old crop vs. 1.1001.400 M T. expected – new crop vs. 0-50 K T. expected
Once again the trade gets caught leaning the wrong way thinking the USDA would slightly reduce the size of the corn crop. The increase in yield matched the highest trade estimate. With this size of crop we are going to be relegated to a trading range atmosphere at best as we move forward. As of this writing the only way we can sustain a move beyond the highs we saw in mid-October is if SA has problems. Currently I don’t see any problems down there but the season is just getting started.
Interior corn basis levels continue with its recent steady to higher bias. As corn harvest winds down end-users are starting to raise bids as the thought is now that whatever cash corn that has been sold will be it for a while. The gulf continues to show an easier bias due to lower freight costs. Corn spreads ran steady to easier on the day – some in response to the bearish looking report, some in response to the ongoing index fund (passive longs) roll.
So much for the idea that the corn market could sustain a rally; the supply is just too big. Coming into today the spec trading fund sector had reduced their net short position to the lightest I have seen in some time. Given today’s report and price action I have to think this sector will now be reinstating those shorts. The best that can be hoped for over the near term is that we continue in a trading range affair – the question now is whether the $3.25 level holds or do we go all the back down to the $3.15 level. For what it is worth CONAB will be out in the AM with their ideas on corn production – you can be sure their figure will be a rebound from last year’s production. The USDA is suggesting Brazil’s corn production will increase by 17 M T. vs. last year.
Daily Support & Resistance Dec Corn: $3.38 – $3.45
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