Analysis: Corn

Corn Rallies (Slightly) for Second Day; New Crop Acreage Likely Out Thursday

Feb 22, 4:47 pm | Corn

If past USDA Outlook Forums are any indication, the trade will be made aware of new crop seedings sometime Thursday afternoon, with the completed balance sheet due Friday. The risk of a sub-90 Mil Acre total has allowed the market to add some risk premium, but AgResource maintains a sell-the-rally mentality without adverse weather this spring. Ethanol margins have corrected some $.20/Gal in recent days, and weekly production (also out Thurs) should continue to erode seasonally.   The South American weather forecast has extended normal/above normal rainfall across Central & Northern Brazil through the first week of March, and climate guidance lacks any evidence of drought through the next 30 days. Us exporters announced this AM that South Korea canceled…

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Corn Finds Support at Moving Averages; Outlook Conference Corn Seeding Eyed

Feb 21, 4:50 pm | Corn

CBOT corn ended slightly higher, with major support noted at March’s 20- and 200-day moving averages. Fund managers sold beans against corn amid the risk of lower than expected US corn acres being presented at this week’s USDA Outlook Conference. However, ARC research is increasingly suggesting that a major weather issue is needed to resume a bullish corn story, and there’s no evidence of adverse weather in S American into mid March.   Export demand continues and the US Gulf market is competitive for another 30 days. FAS this morning announced exporters had sold 380,500 MTs of corn to Japan and unknown destinations, of which 46,000 is for new crop delivery. However, this afternoon the USDA said that the sale…

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Corn Falls to Test Tech Support; Early Week Trading Critical

Feb 17, 4:51 pm | Corn

CBOT corn futures slipped another 5-6 cents as new input continues to be mostly bullish. South America’s weather pattern lacks threatening conditions through at least the first week of March, safrinha corn planting in Brazil reached 58% this week, vs. 42% in mid-Feb a year ago, and Dalian futures in China settled down 4% on the week. Newly placed long positions are in danger and additional liquidation is possible on Tuesday. Note that May corn’s 20-day average rests at $3.75 – right where the contract settled today.   Funds as of early this week were also much longer than expected. As of Tuesday, managed funds’ net long position totaled 85,000 contracts, up 57,000 on the week and compared to expectations…

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AgResource’s 2017 US Corn Acreage Forecast

Feb 16, 4:18 pm | Corn

AgResource estimates US corn planted area in 2017 at 92.3 Mil Acres, a bit higher than much of the trade but, down nearly 2 Mil from ‘16. The graphic at left illustrates that acreage enrolled in the CRP will be down (slightly) for a 9th consecutive year; winter wheat acreage is of course down nearly 4 Mil, and normal prevent plant acreage is pegged at 2 Mil Acres, vs. 3.4 Mil last year and 6.7 Mil in 2015. Also note that the average price of Dec corn so far in Feb rests at $3.97, vs. a final average Feb price of $3.86 last year.   The price calculated for revenue is higher, and average proven yields will also be up…

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Corn Falls From New Highs; Bullish Fundamentals Lacking

Feb 16, 4:13 pm | Corn

March corn surrendered all of Wednesday’s rally amid a slowing of new fund buying. US weekly corn sales were at a 5-week low 31 Mil Bu, vs. 38 Mil a week ago, and 54 Mil per week in in mid-January. There are still no major crop problems in S America, and funds’ newly established net long position makes little sense without a major N Hemisphere weather problem. The graphic attached charts managed funds’ net position in mid-Feb vs. US corn stocks/use. ARC estimates funds this AM were net long 50,000 contracts, and we doubt this can be extended without a substantial demand change to US or world balance sheets.   Cash grain markets are also a bit weaker. Russian milling wheat…

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Corn Rebounds; Chart Pattern Supportive

Feb 15, 4:11 pm | Corn

New money continues to flow into grain futures, which is partially a function of inflation expectations and partially due to rising currencies in South American and Russia. Other fundamental news is lacking, with no sales reported by FAS this AM, and with ethanol production showing more clear signs that a seasonal decline lies in the offing. Interior basis levels have also weakened in the last few weeks – and basis across the W Plains is still up to $.50 below spot futures. There doesn’t seem to be any shortage at all of wheat or corn, but momentum in the short run continues to favor the bulls.   Weekly ethanol production through Feb 10th totaled 306 Mil Gal, down 4 Mil…

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Corn Ends Weaker; Fund Buying Slows

Feb 14, 4:44 pm | Corn

CBOT corn futures settled just marginally weaker following two days of massive fund buying. The US dollar ended higher, South American weather remains mostly favorable, and Mexico’s Parliament looks to introduce a bill aiming at replacing US corn with S American origin. Mexico typically has 65-70% of its US corn needs covered by early February, but there have been 100-160 Mil Bu purchased by Mexico in the Feb-Aug period in recent years. AgResource doubts that Mexican demand will change much through April, but thereafter it’s more of an open question? But this does serve as a reminder the US trade policy warrants close watching in the months ahead.   Otherwise, fundamental input continues to trend a bit more bearish. Argentina…

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Corn Maintains Tech Support; Now Competing with Feed Wheat For Export Demand

Feb 13, 4:17 pm | Corn

March corn hit new-post harvest highs and remains firmly positioned above all major moving averages. Open interest continues to soar, suggesting new fund money is being put to work, and there’s still no compelling evidence to suggest a collapse in value in imminent. Funds bought 6,000 on Monday.   However, clients should be mindful that Gulf corn is again offered near parity with Black Sea wheat into May. And, Ukrainian corn basis is in retreat, and there are still no major crop threats in South America. Brazil’s safrinha crop will be planted much earlier than last year, and so we’re unwilling to chase rallies higher. The graphic attached details corn’s discount to Black Sea feed wheat, which has changed fairly…

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