Corn Commentary
July Corn closes 4 ¼ cents higher ($3.77 ¼), Sept 4 ¼ cents higher ($3.85 ½) and Dec 3 ¾ cents higher ($3.95 ¾)
July Chgo Ethanol closes 0.001 cent a gallon higher ($1.559), August 0.001 cent a gallon higher ($1.556)
It was a fast and furious start to corn trading on Tuesday morning as speculative short covering had prices 6-7 cents higher in the early going. The short covering was prompted by buying in the different wheat varieties. The day’s highs were made in the first hour of trading – the balance of the day was spent in consolidation within 2-3 cents of the highs. The size of the speculative short positon is probably the best support the market has at this time. There is some concern around the dryness in the far western, northwestern reaches of the Corn Belt. Short term weather has a good portion of the Corn Belt staying dry with moderate temps. Heat will rebuild into the Midwest by the weekend. Forecasters differ as to whether or not the rebuilding heat will create unsettled weather. Most forecasters do agree that further out rain will return to the heart of the Corn Belt.
It looks like we did see some old crop corn move on Tuesday’s early rally. Not much day-to-day change is being seen at most interior corn basis locations. A couple of interior river locations did see some easing but that may be in response to an easier Gulf basis. Corn spreads did come in fractionally – I’m thinking that had more to do with the flat price short covering. The “big boy” index fund rolling against the July contract starts tomorrow.
For as strong prices were in the early going on Tuesday the close failed to confirm old crop corn is breaking out of the month’s old trading range affair. The chart picture for new crop corn, however, looks a bit stronger. Both the day’s high and close was the best we have seen dating back to the first week of March. To further the rally we will have to see either further strength elsewhere within the Ag complex and/or threatening forecasts.
Daily Support & Resistance for 06/07
July Corn: $3.74 – $3.80 (?)
Dec Corn: $3.93 – $4.00 (?)
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