Corn Commentary
March closes 5 ½ cents lower ($3.65 ½), July 5 ¾ cents lower ($3.79 ¾) and Dec 5 ½ cents lower ($3.91 ¾)
March Chgo Ethanol closes 0.2 cents a gallon higher ($1.506), April 0.5 cents lower ($1.536)
Weekly Ethanol Grind – 1.034 million bpd vs. 1.040 last week – Stocks – 22.7 million bbls vs. 22.5 last week
USDA AG Outlook Forum suggests the 2017 corn acreage will be 90.0 million acres vs. 94.0 million last year
Weekly Corn Export Sales – old crop vs. 800 K – 1.100 M T. expected – new crop vs. 300-500 K T. expected
Flat price corn rolls over from its recent 2-day attempt to retrace last week’s sell-off. This seemed technical in nature as the rally stumbled at the recently established resistance. Weakness elsewhere within the Ag complex added to the poor price action. The daily grind for ethanol continues to slip yet stocks continue to build suggesting the possibility for further slowing in the weeks ahead. For what it is worth DDG prices are at levels not seen since the fall of 2014 and that in turn competes in the feed circles. The USDA AG Outlook Forum suggesting this coming year’s planted corn acres at 90.0 million (down 4 million from last year) was pretty much ignored I’m told the Forum will outline the coming year’s supply-demand outlook Friday morning. I think the bright outlook for SA’s corn crop has dampened the recent enthusiasm to own US corn despite what I feel will be good export program for the next 2-3 months. March option expiration is tomorrow – the 3.70 calls are big as are the 3.60 puts – this can help explain the March contract’s price action moving into mid-range of these calls and puts.
Interior corn basis readings are running steady to better. The better basis comes from locations involved with export as they follow the lead of the Gulf which continues to grind higher. Basis levels elsewhere are mostly steady. The recent break in the flat price has pretty much shut off any new producer selling. Spreads ran mostly steady on the day – old crop to old crop and old crop to new crop.
The technical look at corn prices is not very pretty given last weeks’ break coupled with the recent 2-day attempt to retrace and now failing today. Given what the USDA Ag Outlook Forum had to say about this coming year’s planted corn acres being down 4.0 million and the market’s failure to show any kind of positive response I’m not sure tomorrow’s outline for supply-demand will be able to sway the new liquidation phase we appear to have entered. I don’t think the flat price is going to fall out of bed from here but rather grind sideways to lower to near midrange of the Sept low to the recent high; roughly $3.67 July.
Daily Support & Resistance for 02/24
July Corn: $3.77 ($3.75) – $3.84
Dec Corn: $3.89 – $3.95 ½
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