Corn Commentary
Sept Corn closes 5 ¾ cents higher ($3.72 ¼), Dec 5 ¾ cents higher ($3.86 ¾) and March 6 cents higher ($3.98 ½)
Sept Chgo Ethanol closes 0.019 cents a gallon higher ($1.595), Oct 0.018 cents higher ($1.579)
USDA announces 180 K T. new crop corn sold to Mexico
Weekly Corn Crop Rating & Progress – 60% GE (-1%) vs. 61% expected vs. 74% year ago – Silking – 93% vs. 94% 5-year average – Dough Stage – 42% vs. 44% 5-year average – Dent Stage – 7% vs. 11% 5-year average
Short covering ahead of the USDA production report on Thursday, August 10th as well fears over Iowa dryness (parts of west central Illinois also) had corn prices trading higher on Monday. Not that I’ve seen that many but what yield checks I have seen do not support a 170.7 bpa (previous USDA) yield. I’m not sure the USDA will dramatically slash yield projections as that is not their style for the August report. Average yield guesstimates from the trade are coming in at 165.9 (Bloomberg) to 166.2 (Reuters). If one believes either one of these estimates it would suggest a crop size of 13.807 billion bu. to 13.855 billion bu. These figures would represent a production drop of 400-455 million bu. I doubt the USDA will change harvested acres on this report.
The underlying trend in the interior corn basis reads higher as old crop movement is barely noticeable. I did see some flip-flops at the different river locations. This comes down to where corn is needed vs. where corn is not needed. The best basis levels are still to the processor. Despite the improving basis levels for old crop origination nearby spreads remains defensive looking. Forward spreads, Dec forward, are trying to suggest a basing action which would suggest the realization of a lower new crop production.
Since Dec corn has held the suspected support at $3.74-$3.75 the idea of a trading range affair lives on. It will be up to the USDA and its data on Thursday, the 10th, to decide if the trading range lives on and what kind of upside retracement we see or if the market fails last week’s support levels. For what it is worth daily technical considerations suggest higher prices.
Daily Support & Resistance for 08/08
Sept Corn: $3.67 – $3.78
Dec Corn: $3.81 – $3.92
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