Corn Commentary
Dec Corn closes 2 ¼ cents higher ($3.50 ½), March 2 ¼ cents higher ($3.64) and July 2 cents higher ($3.79 ¾)
November Chgo Ethanol closes 0.005 cents a gallon higher ($1.430), Dec 0.018 higher ($1.436)
Weekly Corn Export Sales – 811.5 K T. old crop vs. 800 K – 1.100 M T. expected – 90.0 K T. new crop vs. 0-100 K T. expected
USDA announces 845.8 K T. old crop corn sold to Mexico – 510.5 K T. new crop corn sold to Mexico
FC Stone suggests US corn yield at 173.7 bpa – Informa suggests US corn Yield 173.4 bpa – USDA last month at 171.8 bpa
It’s called short covering!!! Since August 31st flat price corn has been a 20 cents trading range. During this time frame open interest has gone up in excess of 290 K contracts. It appears to be a battle ground; commercial longs vs. spec shorts. History suggests that in the end the commercial wins (more times than not). So what will prompt the commercial to sell – when he buys cash corn to offset his long hedges. The producer, so far is not a willing seller. He won’t sell until he sees higher prices. That will have to come in the form of basis appreciation and/or a higher futures price. Basis normally appreciates into December. What will prompt the spec to cover his shorts – better demand and/or continued strong producer holding! For the upcoming production update, Nov 9th, the thought is that yield will rise and demand increases will try and offset. I can see better feed usage as well as better ethanol usage – not too sure about exports. Cumulative weekly export sales are running 7.7 M T. behind last year’s pace. Then again exports this year are expected to lag last year by 11.2 M T. In summation – the trading range lives on!!
Interior cash corn prices have a mixed look on Thursday. Midwest processors continue to show the best bids. Western interior bids continue to be soft looking. River bids are mixed as changes differ from location to location. Gulf prices appear to be edging higher. Corn spreads are showing fractional improvements within the crop year but nothing yet to suggest a tightening trend is developing.
Speculative short covering is our best strength. Prices are mid-range within the trading affair that started in late August. Despite attitudes that the corn crop will increase on Nov 9th and demand may not keep pace the idea is that the spec is just too short for the current time frame. Bottom line – the trading range lives on!!!
Daily Support & Resistance for 11/03
Dec Corn: $3.47 – $3.54
March Corn: $3.61 – $3.68
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.