Analysis: Corn

Funds Begin Exiting Short Positions; Moving Averages Targeted:

Nov 17, 3:38 pm | Corn

The CFTC this afternoon confirmed that, as of Tuesday, managed funds held a record net short position worth 231,000 contracts. Even following today’s rally, ARC estimates funds’ position this evening at a net short 230,000. As seasonal trends point upwards in late Nov, profits are being taken. Argentina remains dry. China is rumored to have secured several cargoes of US corn, and the Brazilian real is noticeably stronger today. A secondary bottom has likely been scored.   Notice in the graphic that extreme short positions rarely last beyond a few weeks. While massive supply dislocation is needed to change the structure of grain markets, a short term rally effort very likely lies in the offing. Note, too, that operational models…

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Corn Ends Weak Again; Fresh Bearish News Lacking Though

Nov 16, 3:51 pm | Corn

Funds expanded their net short position in corn slightly (now estimated at 251,000 contracts) and overall fresh news is lacking. What news is available, however, is somewhat supportive. As expected global climate updates now account for the arrival of La Nina, and so feature warm/dry weather through winter in Argentina, Southern Brazil and Southern US.   US weekly export sales totaled a decent 37 Mil Bu, down sharply from last week but only 27 Mil per week is needed to meet the USDA’s forecast, which was revised upwards in last week’s report. Japan was a massive buyer last week.   The graphic above also makes clear the recent boost in South American cash basis. Argentine planting this week has reached 35.4%…

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Dec Corn Finds Secondary Bottom?

Nov 15, 4:02 pm | Corn

Dec corn again took a breather after Monday’s decline and another surge in open interest – which at 1.7 Mil contracts is the largest since 2010. The trade is well aware that funds’ position this evening is by far record large, and the short side of the market is getting rather crowded. Argentine fob basis continues to inch higher, and the EIA’s weekly ethanol numbers again featured near record production and moderate non-domestic blending disappearance – Brazilian ethanol continues to rally and is currently quoted 30% above the US Gulf.   US ethanol production last week totaled 310 Mil Bu, down 1 Mil from the prior week but up 11 Mil from the same week a year ago. Residual disappearance…

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Dec Corn Ends at New Contract Low; First Notice Day on the Horizon

Nov 14, 4:27 pm | Corn

Dec corn continues to eye the Sep contract’s low ahead of first notice day at $3.30-3.35. The USDA’s November WASDE confirmed there’s an overabundance of supply, particularly across the Plains, and large deliveries are likely. Funds, however, are now short an estimated 245,000 contracts, a new record, and ARC doubts sub-$3.30 spot futures lies in the offing. Biofuel margins remain solid in spite of today’s drop in crude & gasoline futures. Argentine basis is strengthening, albeit slowly.   South America’s Dec-Feb climate outlook will be updated Thursday morning, and with La Nina to be established rather soon, it’ll be interesting to see NOAA’s opinion on rainfall in Argentina and S Brazil. Lite & scattered showers will impact parts of Central…

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Corn Finds Support at Contract Low

Nov 13, 4:16 pm | Corn

Weaker major exporting currencies and a lack of fresh export news sent corn to minor losses, though Dec managed to hold above prior lows. The market lacks a story on both sides for now, and until more is known about the duration of Argentine dryness, and whether it persists into December, both the bulls and bears will struggle for leverage.   The CFTC’s report this afternoon pegged managed funds net short position as of last Tuesday at 206,000 contracts, up slightly on the previous week. Following post-WASDE report selling, ARC estimates funds’ net position this evening at a record large 231,000 contracts. US farmers will largely stay absent from the market, and the question ahead is who is left to…

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Nov-Jan US Yield Changes

Nov 10, 4:21 pm | Corn, Soybeans

NASS still has one report left to fine tune US 2017 US row crop production,  major changes are unlikely. A corn yield above 170 (to say nothing about record yield) has been a surprise, but in January ARC expects yield to be maintained at 175, give or take fractions of a bushel. The adjacent graphic shows changes in corn & soybeans yields from Nov to Jan since 2000, it’s been rare for yields to change by more than 1.5%. In fact, since 1980, yield adjustments of just 1% or less catch a majority of NASS’s final report estimates. Even a yield change of 1.5% would imply corn yield up or down 2.5 Bu/acre, and a bean yield change worth just…

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Corn Takes Breather Following USDA Lashing

Nov 10, 4:08 pm | Corn

Corn futures rebounded 2 cents in decent volume, but more than anything this is viewed as the market just taking a break from Thursday’s collapse. Dryness in Argentina will persist for another 10 days, which warrants monitoring, but there’s not much of a bullish story in the near term. But neither does it pay to be bearish with funds now holding a record short position, and ARC’s work suggest the long-established price range will continue until S American yields can be assessed.   Interior basis levels across much of Corn Belt are incredibly weak as stockpiles mount, but there’s little available to drive funds to add to their short position, which ARC estimates this evening at 230,000 contracts (vs. just…

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Analysis of the USDA’s November Reports

Nov 9, 4:52 pm | Corn, Soybeans, Wheat

World 2017/18 stocks of wheat/soybeans are record large and up a combined 13 MMTs, while world corn stocks are down 23 MMTs to 204 MMTs! The net result is that Global Major World Crop ending stocks are down 10 MMTs, the first stock fall in 4 years! From 2012 into 2016, world major grain stocks grew just over 50% as world grain production was nearly double the growth in world demand. Somehow, world grain consumption has to catch up with production with most private estimates pegging China’s corn stocks some 75-100 MMTs above the WASDE forecast of 79 MMTs.   The graphic of global major crop ending stocks reflects that there is an abundance of grain in the world, and…

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Corn Market Awaits US Yield Update

Nov 8, 4:37 pm | Corn

Dec corn ended weaker but off session lows, and understandably the market has traded in a narrow range ahead of NASS’s next revision to US crop production. The average trade guess on ending stocks is unchanged at 2,360 Mil Bu, in spite of a likely modest boost to yield. Other numbers to watch on Thursday include Black Sea corn production, but of course S American supply & demand will be left untouched.   This week’s EIA report was modestly supportive. Ethanol production through the week ending Nov 3rd totaled 311 Mil Gal, again just shy of the all-time record. Residual use also continues at a record pace, and weekly ethanol stocks were down slightly. Spot gasoline hit yet newer rally…

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