Dec closes 1 ¾ cents higher ($3.56 ¼), March ½ cent higher ($3.61) and July½ cent higher ($3.74 ¾)
Jan Chgo Ethanol closes 1.0 cents a gallon lower (1.743), Feb 0.5 cents higher ($1.671)
Weekly Ethanol Grind – 1.023 M bpd vs. 1.012 last week – Stocks – 18.5 M bbls vs. 18.4 last week
The 3rd day of flat price short covering has the corn market challenging suspected resistance levels; the mid-$3.60’s basis March. Most of the strength came relatively early in the day session – the balance of the session was spent retracing the early rally. It seemed to me that cash related selling was responsible for the easing off of the day’s highs. Direct new bullish news involving the US corn market seems to be lacking. The most influential item that I can see is the ethanol market that has been rocketing higher. Most are citing technical considerations as the rationale for the rally. Last Friday the USDA reminded us of plentiful supplies in both the US as well the world yet the attempt to sell off on that news ran out of selling. Brazil appears to be getting plenty of moisture and the dry areas of Argentina are being forecasted to see beneficial moisture late this weekend, early next week. I’m wondering if the trade is not already looking ahead to the early part of the New Year as index funds are expected to do some large buying to get the corn percentage back into the proper mix.
The trend in the interior corn basis continues to be steady to higher. The Gulf basis sits just above season’s lows. Corn spreads within the crop year (sans Dec) ran unchanged while gaining fractionally on the new crop. We have yet to see any deliveries against the December contract. Dec corn is scheduled to expire tomorrow at high noon.
The short term technical read is higher while the longer term technical look is still sideways. It seems there is a fair amount of cash corn sitting over the market and without some new direct news will continue to act as resistance for the time being. $3.65 to $3.70 appears to be a formidable hurdle for March corn.
Daily Support & Resistance
March Corn: $3.56 – $3.65
July Corn: $3.70 – $3.79
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