July Corn closed 1 ½ cents lower ($4.18 ¾), Sept 1 ½ cents lower ($4.28) & Dec 1 ¼ cents lower ($4.35 ¾)
June Chgo Ethanol closed $0.011 cents a gallon higher ($1.470) & July $0.011 cents higher ($1.481)
Since July of 2014 the $4.40 level has been resistance for nearby corn futures. Since July of 2014 the mid-low $4.50’s has held Dec corn futures. Both of those levels were challenged in the early going on Wednesday only to be turned away. The early rally stemmed from the lower than expected rate of planting. Many forecasters are suggesting that by week’s end the Corn Belt will move into much clearer weather pattern. I don’t think we’ll be totally void of moisture but it is thought that whatever rain events we see as we move into June they will be of far less intense moisture when compared to recent weeks. These clearer forecasts has many corn producers weighing their options as to try and plant corn beyond the “prevent plant” dates given the sharp rally of the past two weeks. We saw a sharp wave of profit shortly after the day session started and prices were unable to challenge the earlier highs for the balance of the day. Also on the traders’ minds is the fact the corn market topped out this week last year. Given the sharp rally of the past two weeks and the increased implied volatility today’s correction should not be deemed as unusual.
The Ohio River eases its corn basis by 2 cents, Decatur, IL eases 3 cents, Toledo improves 2 cents, Seneca, IL eases 1 cent and Savanna, IL eases 1 cent. We have seen a fair amount of cash corn sold on the current rally. The Gulf continues to be strong from logistical problems due to high water levels. Corn spreads had a mixed day; the nearby spread ran unchanged while the nearby gains out to July of 2020 while the 2019/20 crop eases against the 2020/21 crop. All of the spreads are linked to the unknown around this year’s new crop and what it may imply for the next crop year. These year-to-year spreads will stay more than interesting until we have a better handle on what this growing season brings us.
Important longer term resistance levels are challenged and are being honored. We’ve had quite a run higher over the past two weeks so some correction is almost warranted. I do think that until we have a better handle on what the US producer is going to do in the next few weeks a volatile trade will continue. The $4.00 level, give or take a few cents should be viewed as the first decent level of support for July corn. The same can be said for the $4.15 level (give or take a few cents) for December corn. $4.30 is immediate resistance for July corn and $4.45 or so for December corn. For the near term I’m thinking we need to stay flexible, fading short term extremes, until we have a better handle on what is going to get planted vs. what is not going to get planted.
Daily Support & Resistance for 05/30
July Corn: $4.05 – $4.25
Dec Corn: $4.26 – $4.43
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