May Corn closed 5 cents lower ($3.09 ¼), July 5 cents lower ($3.17 ¼) & Dec 5 cents lower ($3.32)
May Chgo Ethanol closed $0.037 cents a gallon lower ($0.893), June $0.037 cents lower ($0.914)
Fear based selling dominated the Ag trade early in the going Tuesday morning. At one point old crop corn was down 13 cents and new crop corn down 12 cents. On the break May corn traded down to $3.01 before some short covering/bottom picking stepped in. It should be noted that $3.01 held the break back in early September of 2016. As far as I’m concerned it all comes down to supply vs. demand. We have plentiful supplies of corn with waning demand. To get the demand part of the equation back on track we will need to see the country open up to travel (ethanol usage) and supply chains opening back up (feed). I did see a story that suggested China may waive tariffs on US corn imports in an effort to get back on track with what they said they would do back in January. There was another story suggesting Ukraine corn stocks are at a 4 year low. Going forward we will begin to talk about May corn delivery potential. Given the decline in demand why not deliver?
Interior cash corn markets (basis) are strengthening at most locations as cash corn movement has slowed to a crawl if that much. Selected processors are improving their basis as are river locations involved with export. The Gulf basis for corn is fully steady dating back to last Thursday. Corn spreads were flat upfront. Sept forwards spreads had a widening bias (possible reflection of early corn planting).
Despite the bounce off of the early lows corn charts still do not suggest the tide has turned. We may be in line for some short covering just because May corn held where it did, Sept 2016 lows. The market does show room to rally but in the grand scheme of things 10-15 cent rallies appear to be about it (just my opinion).
Daily Support & Resistance – 4/22
July Corn – $3.14 – $3.24
Dec Corn – $3.28 – $3.38
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