Corn Commentary
July Corn closed 10 ½ cents lower ($3.67 ¼), Sept 10 ¼ cents lower ($3.76 ¼) & Dec 9 ¾ cents lower ($3.88 ¼)
July Chgo Ethanol closed 0.021 cents a gallon lower ($1.426), August 0.025 cents lower ($1.444)
Weekly Corn Export Inspections – 1.408 M T. vs. 1.000-1.700 M T. expected
Weekly Corn Condition Rating – 77% GE (-1%) vs. 78% expected vs. 67% year ago
Trade tensions (tariff talks going nowhere) won’t go away. Rain over the weekend shrinks selected areas of concerns (dryness) – more in the forecasts for later this week. It was interesting to note that the Sunday night session was relatively quiet as prices traded both sides of unchanged. The onslaught came with the day session as funds fell all over themselves to get out. Absolutely no regard was given to the possibility of seeing a friendly USDA Supply-Demand report tomorrow. Crop conditions are expected to stay strong leading many in the trade to believe we are in the process of another near record if not record yield. Personally I think it’s a bit early for this type of talk but it’s tough to stand in front of this type of price action. In addition to the USDA Supply-Demand update tomorrow CONAB will also update this season’s corn production. Last month CONAB suggested the Brazil corn crop was 89.20 M T. Since then I’ve seen estimates as low as 82.0-79.0 M T. The Reuters traders’ estimate is 84.47 M T. As far as the US carryout are concerned traders’ estimates suggest a drop of about 20 million bu. My thought is if there is going to a surprise US carryout data will come in lower than expected (better exports).
Cash corn markets are quiet as little movement is being seen with the recent sharp. Processors continue to show the best bids and they are a touch better. The Gulf seems quiet. Corn spreads continue to be soft. Some of the upfront weakness can be attributed to the ongoing index fund roll but I have to think a good majority of it is in response to the spec liquidation.
In two weeks’ time July corn drops 45 ½ cents (high to low), Dec down 41 ¾ cents (high to low). Despite this dramatic looking drop the 14-day RSI does not read oversold. July reads 27.29 and Dec reads 28.15. I’ve always used 20 or lower. Daily momentum indicators do read oversold but experience with these has taught me they can stay oversold and/or overbought for an extended length of time. Because of tomorrows report data it would not surprise me to see some minor short covering in the overnight.
Daily Support & Resistance for 06/12
July Corn: $3.62 – $3.75
Dec Corn: $3.83 – $3.96
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