Corn Commentary
July Corn closed 3 cents higher ($3.83 ¾), Sept 3 ¼ cents higher ($3.93) & Dec 2 ¾ cents higher ($4.04)
June Chgo Ethanol expired unchanged ($1.430), July closed 0.006 cents a gallon higher ($1.462)
For the sake of simplicity Tuesday’s corn trade can be called “turn-around-Tuesday”. The buying that I saw was mostly bottom picking given the market’s short term oversold going home on Monday. Other than the slight downgrade in the nation’s corn crop rating I didn’t see much to prompt Tuesday’s slight bump up in prices. Weather forecasts for the most part appear non-threatening; almost bearish looking. We still have concerns over the ongoing trade talks between the US and China as well as the NAFTA members. China did make an offer to buy $70 B of agriculture and energy commodities over one year as well as some selected manufactured goods. As of this writing the US has not responded to this offer. On a side note – it still looks quite dry in China’s northeastern corn growing area and it is major growing area. I’ve seen little conversation around this but if the current weather trend continues the conversation will come around sooner vs. later.
Interior cash corn bids show the processor looking for corn. Movement has shut down following the recent break in prices. The Ohio River bid comes back a bit after its recent 11 cent break. Illinois River bids remain soft given the recent hike in freight. The best that I can see at the Gulf is stable. The July/Sept spread continues to be soft but beyond that bull spreads were trying to work. I think some of the softness in the nearby spread is due to the idea that the “big boy” index fund roll will start on Thursday. The bull spreading that we saw beyond is a result of the better processor bids.
I would like to say corn prices have gone low enough for now but does that make the market bullish? Right now I’m thinking we may go into a consolidation phase for a while within shouting distance of today’s lows. This idea leaves the door open for yet new lows for the current break but not by much. Attempts to rally should find problems at the Friday low to the Sunday night high. It looks like we have a 1 cent gap in that time frame.
Daily Support & Resistance for 06/06
July Corn: $3.80 – $3.88
Dec Corn: $4.00 – $4.08
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