Corn Commentary
March Corn closes 1 cent higher ($3.78 ¼), July 2 cents higher ($3.94 ½) and Dec 1 ¾ cents higher ($4.06)
March Chgo Ethanol closes unchanged ($1.458), April 0.010 cent higher ($1.482)
Weekly Corn Export Inspections – 947.6 K T. vs. 1.100-1.400 M T. expected
The majority of the session saw a quiet trade lingering around the unchanged level. The last 30 minutes saw a push to new highs for the day, new highs for the ongoing rally. One can talk about strength elsewhere in the grain sector as an excuse. Personally I believe the corn market has its own rationale for its strength; strong exports as the US remains the corn market to the World and great domestic demand (feed and energy). Concerns over a shrinking SA corn crop continues to lend support. Adding to all of this is the fact the spec is amassing a net long position in the corn market. When the spec is moving it’s hard to stand in front of them.
Interior basis levels show a steady to lower tone. Midwestern rivers still show logistical problems due to flooding. The processor has backpedaled a bit due to recent increases in cash movement. The Gulf stays firm as supplies are slow in getting down there. May forward corn spreads continue to show fractional improvement. March corn lags due to a bump-up in deliveries; 525 contracts delivered overnight vs. the recent 25 contracts.
The grind higher continues!! Today’s rally has the flat price entering the low end of what looks like pretty significant resistance. Thursday will be a big day with the CONAB update (Brazilian production and the USDA supply-demand update. The Bloomberg trader survey suggests the US corn carryout will come down 39 million bu. and the World corn carryout will come down by 4.2 M T. Trade guesstimates for Brazilian corn average out to 91.6 M T. vs. 95.0 last month. Last month’s estimate from Conab was 88.0 M T. The average trade guesstimate for the Argentine corn crop is 36.5 M T. vs. 39.0 last month. Given the drawdown of the World carryout I would expect the USDA to shift some better demand to the US. With that said don’t be surprised to see the US corn carryout come in at a sub 2.300 billion bu.
Daily Support & Resistance for 03/06
May Corn: $3.83 – $3.92
July Corn: $3.90 – $3.99
Dec Corn: $4.02 – $4.10
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