May Corn closes 11 ¼ cents higher ($3.69 ¼), July 11 cents higher ($3.77 ½) and Dec 9 ½ cents higher ($3.94 ½)
May Chgo Ethanol closes 1.5 cents a gallon higher ($1.573), June 0.7 cents higher ($1.567)
Weekly Corn Export Inspections – 1.093 M T. vs. 1.000-1.300 M T. expected
Corn Planting Progress – 34% planted vs. 31% expected vs. 43% last year vs. 34% 5-year average – Emergence – 9% vs. 12% last year vs. 8% 5-year average
Monday’s trade was all about the weekend weather – much above normal rainfall in many areas of the Midwest/Corn Belt. Granted this was forecasted but if one looks at the price action of late last week many of the spec shorts discounted this forecast. If I didn’t know better the forecast was faded due to so many times that when nasty weather if forecasted it fails to come to fruition. This time it occurred as forecasted if not more. As this week progresses the trade will be further assessing not only localized flooding but river flooding as well. Within the assessment the idea of “replanting” will be discussed. It should be noted, in my opinion, that the majority of Monday’s strength was prompted by the extreme strength in the wheat market – massive snowstorms in the HRW areas as well as excessive rainfall/flooding in many of the SRW areas.
Interior cash corn markets have a mixed look. River locations where flooding is prevalent the basis is easier. Where flooding is not an issue basis levels tend to have affirm bias as prior to today’s rally fresh farmer selling was meager at best. In areas where planting may be delayed or replanting is necessary movement will remain slight. The gulf basis is holding with late last week’s levels. Bull spreads were working on Monday due to short covering. The spec trade is short the nearby so the short covering we saw today was focused in the nearby.
Despite the sharp strength seen in the corn market on Monday the flat price so far has failed to eclipse interim resistance levels – $3.81 July and $3.96 December. These are levels that have acted as resistance dating back to the first of April. Monday was the third challenge of these levels so maybe the third time will be the charm. We know the spec trade is heavily short corn and timely planting is now being questioned. Forecasts going forward do show a dryer bias but also slow drying rates. Daily momentum indicators have turned higher after moving sideways most of last week. The shorter term inter-day indicators do suggest an overbought. With that said chasing the current rally may prove to be a bit treacherous. For the longest time the corn market has been a proven trading range affair – is it different this time?
Daily Support & Resistance for 05/02
July Corn: $3.73 – $3.81 (?)
Dec Corn: $3.90 – $3.96 (?)
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.