Corn Commentary
March closes 1 ½ cents lower ($3.63 ¾), July 1 ½ cents lower ($3.78 ¼) and Dec ¾ cent lower ($3.92)
March Chgo Ethanol closes 1.3 cents a gallon higher ($1.540), April 1.3 cents higher ($1.560)
Weekly Corn Export Inspections – 1.113 M T. vs. 750 K – 1.000 M T. expected
Flat price corn continues to be range bound with a very slight upwards bias. Demand for US corn continues to be quite good from both a domestic standpoint as well as for export. The problem is that we have the corn to meet that demand (spreads stay relatively wide suggesting the supply is there). Growing conditions in SA continue to be non-threatening suggesting (so far) solid crop sizes. On Thursday the USDA will update US and World supply-demand. Average trade guesses have the US carryout coming down 20 million bu. and the World carryout coming down 550 K T. A lower US carryout would stem from better export as well as better domestic usage (ethanol). I’m not sure the USDA will improve domestic demand enough to create an upside breakout. The wild card could be the World data. Last week there was a story out of Brussels that talked about a 5-year adjustment on EU corn stocks. The story suggested EU corn stocks were 5 M T. too high due to bio-fuel usage. If the USDA picks up on this we could see a pop to the upside – time will tell….
Versus one week ago the interior corn basis is showing a mixed look. The Ohio River is 3 cents better, Burns Harbor is 1 cent better, Decatur In is unchanged, Lincoln NE is 2 cents easier, Decatur Il is unchanged, Cedar Rapids IA is 8 cents lower, Toledo OH is unchanged, Seneca IL (river) is 3 cents easier, Davenport IA is unchanged and Council Bluffs IA is 9 cents lower. The Gulf is running 4 cents lower vs. one week ago. As I alluded to earlier corn spreads stay relatively wide. For what it is worth “big boy” index fund rolling starts tomorrow.
I have to think the corn market will stay range bound at least until we see what the USDA has to say on Thursday. A telling sign that cash corn is sitting over the market is what happened today – on Sunday night March corn opened at $3.64 and proceeded to rally 4 ¾ cents – the day session rolls around and the market breaks down to new lows for the day and we finish a shade lower than where the market started.
Daily Support & Resistance for 02/07
March Corn: $3.60 – $3.66
July Corn: $3.74 – $3.80 ½
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.