July Corn closed 10 ½ cents lower ($4.14 ¾), Sept 10 ½ cents lower ($4.24 ¼) & Dec 10 ½ cents lower ($4.33 ½)
June Chgo Ethanol expired unchanged ($1.513) & July closed $0.043 cents a gallon lower ($1.478)
Weekly Corn Export Sales – old crop vs. 500-800 K T. expected – new crop vs. 50-250 K T. expected
IEG Vantage (Informa) – is suggesting planted corn acres at 84.942 million vs. the USDA at 92.792 million – Average yield 174.0 bpa vs. the USDA at 176.0 leading to a crop size 13.555 billion bu. vs. the USDA at 15.030 billion bu.
July corn loses near 24 cents from Tuesday’s high to today’s low. Dec corn loses near 22 cents from Tuesday’s high to today’s low. So what’s the story behind this sharp sell-off? Granted we have technical considerations prompting the break but I think we have gone far enough in trying to guess just how many acres will go unplanted to corn. Today’s is June 5th and that is the prevent plant date for many areas and I hear planters are rolling in many of those areas (not all). Now we need to have something a bit more definitive but unfortunately we won’t have a good handle on that for some time to come. The USDA will give us a “planted acreage” report at month end but it won’t include how many acres went to prevent plant. Tuesday’s supply-demand update I doubt will show us much of change vs. what was reported in early May; maybe some very slight easing of acres and yield. Monday afternoon the USDA will give us their first impression of the corn crop. I can’t think it will look very good. With that said I have to question just how deep the current sell off goes. Last but not least; supposedly Mexico has compiled a retaliatory tariff list and yellow corn is not on it.
Where river transportation problems exist corn basis levels don’t do much. Where those problems don’t exist basis levels are running steady to better. Processors continue to show the best basis and it does appear new cash sales have slowed especially in areas where planting problems have been the greatest. The Gulf continues to show a firm tone reflecting the high water problems. Corn spreads ran unchanged out to July 2020. With that said the 2019/20 crop loses to the 2020/21 crop which I think reflects the fund selling.
As far as I’m concerned the funds took their cue from the technically inspired sell signal that came out of the Tuesday trade. The market opened higher Monday night on what was perceived as bullish news and has since been selling off. When a market doesn’t respond to what appears as bullish news and fails to follow through technical traders more times than not start heading for the hills. July corn has a gap at $4.05 and congestive type looking support in the mid-$3.90’s. A half way back move of the entire rally targets $3.90 ½ (July). Dec corn has a gap at $4.20 and congestive type looking support in the mid-low $4.10’s. A half way back for the December contract would come in at the $4.09 level. Short term intra-day technical data as well as inter-day technical data suggest we don’t have to chase this break to sell while daily technical data is suggesting the selloff is just beginning. If you want to sell please focus on rallies as volatility is such that a sale in the hole can be quite frustrating.
Daily Support & Resistance for 06/06
July Corn: $4.07 ($4.02) – $4.24
Dec Corn: $4.26 ($4.20) – $4.42
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