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 28,000 a year ago). The energy market’s influence also continues, as made by clear but spot blending margins. RBOB continues to settle at new rally highs.
The issue longer term is whether producers cut acreage (which is needed) amid recent years’ record yields? There should ample incentive to sell 2018 & 2019 crops at $4.00 and $4.20, respectively, and to sustain any lasting rally widespread drought in South America is required. Note that Argentina’s first crop is rated at 91% GD/EX.
