Corn Commentary
July Corn closes 1 cent higher ($3.85 ¾), Sept 1 ¼ cents higher ($3.93 ½) and Dec 1 ¼ cents higher ($4.03 ¾)
July Chgo Ethanol closes 0.023 cents a gallon lower ($1.543), August 0.014 cent a gallon lower ($1.548)
Weekly Corn Export Sales – 348.6 K T. old crop vs. 500-700 K T. expected – 128.0 K T. new crop vs. 100-250 K T. expected
CONAB suggests the Brazilian corn crop is 93.8 M T. vs. previous estimate of 92.8 vs. USDA at 96.0
Thursday brought us another early round of short covering but nowhere near as intense as we saw with Wednesday’s record flat price volume. The day’s highs were made morning; the balance of the session was spent retracing the rally. Prices traded unchanged to fractionally lower in the closing minutes of the session. Technical considerations (breakout earlier this week from the months’ old trading range affair) coupled with weather fears continue to the catalyst for the short covering. The western, northwestern reaches of the Corn Belt are becoming worrisomely dry. Fairly big heat will move into this area and points east as we move into and through the weekend. There is rain in the forecast for mid to late next week. Forecasters differ as to locations of the moisture, how widespread it may be. Most agree the Northern Plains should have the best shot at moisture but after that it is a bit up in the air. Friday’s USDA Supply-Demand update is not expected to show any significant changes vs. what we saw last month. Thursday’s weekly export sales were deemed a non-event since we are trading weather, not so much demand.
Most interior corn basis levels have a defensive look due to the recent cash movement (flat price rally inspired). The Gulf basis is trying to stabilize at recent lower levels. Corn spreads ran mixed on the day – July loses fractionally vs. the Sept and Dec while the July, Sept and Dec gained on the March forward contracts. I think the nearby spread action was a result of the ongoing index fund roll. Tomorrow’s Supply-demand update should act as a reminder to the more than ample old crop stocks which in turn should keep the nearby price structure with relatively wide carries. I think the only way that changes is if the current crop scare becomes a legitimate crop threat.
Thursday’s initial rally ends with some position squaring following this week’s 20 cent rally. This is understandable given tomorrow’s Supply-Demand update as well as the possibility of any weather changes for the beginning of next week. The short term technical read did suggest that prices got a bit high with Thursday’s mid-morning rally. Friday could bring us additional volatility with the USDA report and weather forecast updates. Until we get out of the woods with the recent weather worries I remain partial to buying breaks back to the top end of the trading ranges we just popped out of.
Daily Support & Resistance for 06/09
July Corn: $3.75 – $3.95 (?)
Dec Corn: $3.93 – $4.10 (?)
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