Corn Commentary
March closes 2 ¼ cents higher ($3.70 ¾), July 2 ¼ cents higher ($3.85 ½) and Dec 1 ¼ cents higher ($3.97 ½)
March Chgo Ethanol closes 3.2 cents a gallon higher ($1.604), April 2.6 cents higher ($1.615)
Weekly Ethanol Grind – 1.055 million bpd vs. 1.061 last week – Stocks – 22.1 million bbls vs. 21.9 last week
Weekly Corn Export Sales – old crop vs. 800 K – 1.100 M T. expected – new crop vs. 0-150 K T. expected
Flat price March corn matches its Jan 24th high of $3.71. I get the impression its all about fund $$$ flow vs. an imbalance of demand vs. supply. Since mid-January the daily trading funds have reversed net short positions that have been in place for the past number of months and are now modestly long. Yes – we have good demand for US corn from the export sector as well as from the ethanol sector but cash markets/spreads suggest we have the corn to meet that demand. I see non-threatening weather in SA. Tomorrow the USDA will update US and World supply-demand. Trade ideas have the respective carryouts coming – the US carryout is expected to decline by 20 million bu. and the World carryout is expected to come down by 550 K T. In addition to the USDA updating carryout ideas CONAB (the Brazilian version of our USDA) will update their current season’s corn production. I believe it will be the first objective look at their 2nd season corn crop. In previous reports that have been using last season’s 2nd season production data. Last month CONAB gave us a corn crop of 84.5 M T. – 1st season corn crop was 28.4 M T. – 2nd season corn crop was 56.1 M T.
The interior corn basis is giving me a mixed look; depending on location one can find better basis levels as well as easier basis levels. the processor continues to show the best basis in their respective neighborhood. The Gulf is reading a bit easier with its basis. Corn spreads are running softer within the crop year while old crop is gaining on new crop. Old crop gaining on new crop is indicative of the fund flow of new money coming into the corn market. Index fund rolling completed its second day.
The technical look is strong. If one measures the correction we saw from the last time March corn traded $3.71 it measures to $3.86. If we look at the smaller correction that occurred last week it measures to $3.76. The flat price is nowhere near overbought so there is room to move higher. It is thought that there is a fair amount of cash corn sitting over the market waiting to get sold if the price is right. There is an old adage that the market goes to the orders. With that said we’ll see if the $$$ fund flow can sustain higher prices from current levels.
Daily Support & Resistance for 02/09
March Corn: $3.63 – $3.76
July Corn: $3.78 – $3.91
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