Corn Commentary
March closes 4 cents higher ($3.59 ¾), July 4 cents higher ($3.72 ¼) and Dec 3 ¼ cents higher ($3.86 ¾)
Jan Chgo Ethanol closes 6.3 cents a gallon lower (1.507), Feb 2.3 cents lower ($1.507)
Speculative short covering continues on Wednesday. It seems that all of the short term chatter is turning bullish on corn. The trade talks about the iffy weather scenario in Argentina (too dry in some areas, too wet in others). The expectation is for corn export shipments to pick up as we move into the New Year. Is the US dollar making a top with its recent whip-saw action? Index fund rebalancing is expected to start on Monday the 9th and buying is anticipated. And lastly but not least – some of the early chatter around the USDA update on the 12th will feature a drawdown in US corn stocks (100-200 million?).
For the most part the interior corn basis is running steady to higher. Only one location, Toledo, showed some easing. The gulf is maintaining its recent strength. Corn spreads within the current crop year ran mostly steady on the day while the old crop did show gains against the new crop. The gains against the new crop are in part to the short covering as well as the anticipated pick-up in export shipments as we move into the New Year.
Corn charts still suggest we are a trading range affair but now suggesting a test of the recent topside. Since November recent highs for March corn were against the $3.65 level. On October 20th we saw the market top out against the $3.69 level. Daily momentum indicators read clearly higher. If we continue to move higher in the short term without some sort of downside correction inter-day charts will start to read overbought. With that said if we get past the mid-low $3.60’s without a correction be careful chasing the rally. It’s all about the timing at this point.
Daily Support & Resistance for 01/05
March Corn: $3.56 – $3.65
July Corn: $3.68 1/2 – $3.77½
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