Corn Commentary
March closes ½ cent lower ($3.65), July¾ cent lower ($3.79 ¼) and Dec ¾ cent lower ($3.86)
Feb Chgo Ethanol closes 0.3 cents a gallon lower ($1.503), March 0.3 cents lower ($1.528)
March corn registers its best price, $3.67 ¾, dating back to mid-late October but fails to sustain the rally as the flat price finishes the day fractionally lower. The rally in soybeans and soybean meal continues to be the corn market’s best supporting issue. Some are asking the question “why isn’t the corn market responding to the suspect growing conditions in Argentina?” My answer to that is that the suspected big crop out of Brazil, if it comes to fruition, will more than offset possible Argentine losses. Then again a big Brazil crop is based on a successful 2nd season corn crop – planting of that crop is barely underway. With that said if the corn market does roll over in the near term it will be more in line with a trading range market vs. the development of a new bear market. The SA corn crop (Brazil & Argentina) has a long way to go before it can be confirmed.
Despite the flat price rally challenging trading range highs it has prompted little to no changes in the interior corn basis. The Gulf basis, however, is maintaining a relatively firm tone. Physical corn shipments (exports) should be picking up for the next couple of months as the US remains the World’s primary source for corn. Spreads within the current crop year don’t do much; if anything on a short term downtrend. The old crop/new crop corn spreads are the best they have been dating back to this fall. That sounds like a lot but in reality the July/Dec corn spread has only rallied 4 ¾ cents dating back to mid-December.
Despite the rally from last week’s lows, $3.52 March, flat price corn remains a trading range affair. $3.69-$3.70 remains the trading range high. Without the support from elsewhere within the Ag complex the corn market will continue to be a trading range affair.
Daily Support & Resistance for 01/19
March Corn: $3.60 – $3.69
July Corn: $3.74 – $3.83
The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results.