July Corn closed 1 cent higher ($4.25 ¼), Sept 1 cent higher ($4.34 ¾) & Dec 2 ¼ cents higher ($4.44)
June Chgo Ethanol closed unchanged ($1.513) & July $0.014 cents a gallon higher ($1.521)
Flat price corn jams sharply higher Monday night stemming from the slower than anticipated planting rates. Unfortunately for the bulls the Monday night opening was the high of the day. Today’s highs represent a test of the highs we saw last week as well as tests of the highs dating back to July 2014. Forecasts still show a wetter than normal bias going forward but in some areas work/planting is getting done ahead of these forecasts. Additionally it is being reported that South American corn is being sold into the US southeast for fall and winter delivery. This can be viewed one of two ways – it will solve some problems with a short crop supply or it suggests the buyer feels we have major problem on our hands for sourcing new crop needs this early in the season. It my idea that the market has gone high enough with the current amount of guesswork as to lost acres and yield drag. It’s now time for some hard numbers but unfortunately those hard numbers won’t be seen for some time. Next Tuesday the USDA will update supply-demand. It is not expected to see any radical changes on acres or yield. Conservatively they may show us some very slight declines but their preference is to wait until the end of the month when the “planted acres” report is released. Supposedly the USDA gathers these acreage estimates during the first two weeks of June. Unfortunately the FSA doesn’t report on “prevent plant” acres until August.
Interior cash corn markets have taken on a mixed look Tuesday. River locations that can bypass the logistical problems have a steady to better bias. Locations that can’t bypass the problems have a steady to weaker basis. Processors continue to stand in. The Gulf basis for corn firms in response to the ongoing logistical problems. Corn spreads showed a weaker bias especially old crop to new crop. Remember that we have some minor index fund rolling happening with the bigger index fund rolling late this week. As I mentioned yesterday if I was a fund manager I would be rolling to the new crop as I think that is where the best potential is given the planting problems/suggested yield drag.So – is the corn market making an interim top or are we just moving into a consolidation phase at these new higher levels. The inability to penetrate and sustain prices above the recent highs suggests consolidation to those that are longer term bullish. As I mentioned earlier I think we may have gone higher enough for now with the information that is available to us and I/m not talking conjecture. So the next question becomes how much profit taking do we see prior to getting some hard facts as to acreage loss/potential yield loss. $4.15 to $4.10 should be viewed as immediate support for July corn and $4.30 to $4.25 for December. Given the recent hike in volatility I have to leave open the idea that July corn could decline to the $4.05 level and December to the $4.20 level.
Daily Support & Resistance for 06/05
July Corn: $4.15 – $4.40 (?)
Dec Corn: $4.32 – $4.55 (?)
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