Corn Commentary
May corn closed 4 ¼ cents higher ($3.96 ¾), July 5 cents higher ($4.05 ¾) and Dec 4 ¼ cents higher ($4.20 ¼)
May Chgo Ethanol closed 0.016 cents a gallon lower (1.429), June unchanged ($1.450)
The first day of the new month brings new spec buyers to the corn market. I think the best rationale for the buying is not so much the lagging in US planting but more so the crop developing conditions in Brazil. Given recent US forecasts will get the corn crop planted in a near timely manner. A good majority of Brazil’s 2nd season corn crop is in need of water and the latest forecasts suggest it is not there. Developing dryness in parts of Europe, both east and west, adds to the bullish rationale. If the competition (export) is going to have a short crop it suggests better business for the US. Add the suggested lower acres for the US and it all spells higher corn prices; not only in the US but worldwide.
Despite what I think should be an increase in cash corn movement interior basis levels appear to be better. Most locations are now in the process of rolling out of basis May and into basis July. Most locations that have recently rolled appear to have done it at a 7 cent or tighter spread. Bull spreads, July forward, were working on Tuesday. The May contract lost some ground on the spread due to Dreyfus delivering a chunk of corn. I don’t see much happening at the Gulf. Prices have been easing for a week or so mostly in part to lower freight. In summation; with bull spreads working along with the flat price going higher is considered to be a text book bull market.
The technical read on corn prices; all systems read GO! After looking back at the previous 5 weeks of trading upside targets for July corn range from $4.16 to $4.27. Similar targets for Dec corn range from $4.27 to $4.36.
Daily Support & Resistance for 05/02
July Corn: $4.00 – $4.11 ($4.18)
Dec Corn: $4.14 ½ – $4.26 (?)
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