Corn Commentary
May corn closed 3 ½ cents higher ($3.99 ½), July 3 cents higher ($4.08) and Dec 2 ½ cents higher ($4.22 ¼)
May Chgo Ethanol expired unchanged (1.429), June closed 0.032 cents a gallon higher ($1.486)
Weekly Corn Export Sales – 1.019 M T. old crop vs. 700 k – 1.000 M T. expected – 49.3 K T. new crop vs. -50+150 K T. expected
After Wednesday’s brief pause the corn market resumed its move higher on Thursday. Weekly export sales were deemed solid. I’m still with the frame of mind that the US corn crop will get planted in a near timely manner. I have to think the driving force for the US corn market is the lower than expected US acres as well as the problems Brazil is having with its 2nd season corn crop. I’m thinking a good portion of that crop is in trouble due to ongoing dryness; nothing in the forecasts so far to alleviate these concerns. Argentina continues to have problems. We already know they have a short crop this year but now problems are arising from excessive moisture for their harvest ready corn. On top of all this dryness is being noted in parts of Europe, Ukraine and Russia. On May 10th the USDA will update old crop Supply-Demand as well as their first look at new crop Supply-Demand. My thought is that we could see another cut to the old crop carryout mostly from increased exports. As far as new crop is concerned I have to think we’ll see a noticeable drop in carryout vs. the current year.
It’s a mixed look at the interior corn basis on Thursday. Some locations are bit better while some are a bit easier. The Gulf has firmed up after a weak looking roll to July. Bull spreads continue to work led by the “in delivery” May contract. It seems a prominent commercial has recently stepped up and stopped just over 200 contracts. I have to agree with the bull spreading as it is my thought we will continue to see good demand for the old crop as we move through the balance of the marketing season.
Upside targets for July corn continue to be $4.16, $4.21 and lastly $4.27. Similar upside targets for December corn are $4.27, $4.34 and lastly $4.36. So what’s out there to stem the rally – the thought that the US crop has been established and is up and growing?
Daily Support & Resistance for 05/04
July Corn: $4.04 – $4.12 ½ ($4.18)
Dec Corn: $4.18 – $4.28 (?)
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.