July Corn closes 7 ½ cents higher ($3.84 ¾), Sept 6 ¾ cents higher ($3.92 ¼) and Dec 6 ¾ cents higher ($4.02 ½)
July Chgo Ethanol closes 0.007 cent a gallon higher ($1.566), August 0.006 cent a gallon higher ($1.562)
Weekly Corn Export Sales – old crop vs. 500-700 K T. expected – new crop vs. 100-250 K T. expected
It appears that the speculative shorts are on the run. Flat price volume on Wednesday was the best that I can remember (in excess of 1 million contracts). Technical considerations coupled with developing weather fears are the primary catalysts. Old crop corn registers its best close dating back to early March. More importantly it closes above a trading range we have been in for the past 3 months. New crop corn taps at the Feb 28th high ($4.04) but does not retreat. Dec corn fell ¼ cent short of matching its best close dating back to last summer. On the weather front – it’s going to warm up as we move into the weekend – in the northern Plains its going to get into triple digits. Fears that this heat will move east is underpinning the corn market. There are forecasts for moisture to develop by mid next week but I’m thinking the trade wants to see this forecast stay consistent through the weekend before they believe it. The latest from the NWS suggests a dry bias for the far west, northwest. They still talk about ample moisture for the central areas of the Corn Belt. The USDA is slated to update both old crop and new crop Supply-Demand data on Friday. Slight reductions to previous domestic carryout projections are expected.
The recent rally in the flat price has prompted a fair amount of old crop corn to move and a smattering of new crop. Most interior basis levels are showing a defensive posture and this includes the Gulf. Spreads were firm despite the lower basis as well as the first day of the index fund roll. Flat price short covering overcame all of this.
Rain is in the forecast for mid next week but I’m thinking the trade wants to see it before they believe it. It’s evident that the spec shorts are on the run (covering). We are going to see some of the hottest temps of the season this weekend, early next week. If forecasts begin to waver for this event the spec shorts will really begin to get anxious. I have to think the next stop for July corn is $3.95 – for Dec corn $4.10 or so.
Daily Support & Resistance for 06/08
July Corn: $3.79 – $3.95 (?)
Dec Corn: $3.97 – $4.10 (?)
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.