Corn Commentary
Sept Corn closes 2 ¾ cents higher ($3.47), Dec 2 ½ cents higher ($3.61) and March 2 ½ cents higher ($3.73 ½)
Sept Chgo Ethanol expires 0.005 cents a gallon lower ($1.560), Oct closes 0.010 cents higher ($1.515)
USDA announces 253.3 K T. corn sold to Mexico
The short covering that started last week continued through Wednesday. It appeared to be a quiet, low volume rally. The rationale for the rally was the slow maturation rate of the crop which was highlighted in Tuesday afternoon’s Crop Progress report. We have one more morning for a frost scare for the north, northwest reaches of the Corn Belt. Adding to the rally was the underlying strength exhibited elsewhere in the AG sector (soy complex, wheat). Bloomberg has released the results of its survey for the USDA September 12th production update. The average trade guess for the corn yield is 167.9 bpa (USDA 169.5), corn production 14.003 billion bu. (USDA 14.153). The average guess at US carryout is 2.135 billion bu. (USDA 2.273), World carryout at 197.8 M T. (USDA 200.9). Based on these estimates it appears the trade is still with the idea that the USDA has overstated the crop size on its August report.
Most interior basis locations are reading steady to higher. I say most as one location, Linden, IN is posting a 2 cent lower bid. As of this writing the Gulf does not appear to be hurting for corn. Dec forward corn spreads ran steady out to July. Sept gains fractionally as a noted commercial processor has become a notable stopper of the deliveries.
Attempts to sell-off during the Tuesday night session went nowhere – that opened the door to further short covering from the spec sector. So far I don’t see the current rally be led by demand as we have not seen any spread improvement. I believe the short covering has been mostly fueled by technical considerations; last week’s key reversal. I see some minor resistance at the $3.65 level; much better at $3.70 – $3.75. I’m still with the idea that the mid-low $3.50’s represents some pretty decent support.
Daily Support & Resistance for 09/07
Dec Corn: $3.55 – $3.66
March Corn: $3.67 – $3.79
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