CBOT corn futures remain stuck between end user demand on breaks and cheaper offers out of South America July onward. Chart-based support ($3.65, July) has so far held, and is expected to continue to hold through early summer as managed funds’ maintain a net short position of roughly 205-207,000 contracts. ARC has also mentioned this week that ongoing cool/wet weather is not ideal, and initial crop ratings from the heart of the Corn Belt are hardly bearish relative to current prices.
Cash corn across the W Plains (below) has retained a modest discount to HRW, and cash corn’s discount to sorghum is narrowing.
Weekly ethanol production on Wednesday is estimated in a range of 297-300 Mil Gal, vs. 296 Mil a week ago, and last week’s data confirmed that seasonal plant maintenance has ended. Ethanol production tends to rebound sharply in May & June, and futures-based have stabilized at $.40/Gal in recent days.
We doubt the long established trading range will be altered in the weeks ahead, but we certainly don’t advise a bearish outlook at current prices, with national crop ratings in late May likely to be below recent years.
