A U.S. corn purchase from Mexico supported grain prices on Monday, but continued support for rest of the week does not look good.

Monday, September 21, 2015

***** Fundamental Analysis: Mexico’s purchase of 487,600 tons of U.S. corn today, set the stage for a stronger market, along with the wheat market finding upside energy again.  But, gains may not be lasting with a good week of weather and ongoing talk of good yields from the early harvest generally keeping sustained buying interest on the sideline.  But the purchase does reinforce an important element; end users are finding the current price levels to be attractive, and are willing to extend coverage forward.  Indications China is going to extend their corn support program forward another year, albeit with lower buying prices, may have finally put to rest fears of a govt. liquidation of their big inventories, something we have long argued wouldn’t occur.  Export inspections, 28.9 mln. bu., were the same as last week, and under last year, but weren’t expected to be much better.  Corn harvest is expected to be 13% done on today’s report.  The USDA reported 10%.  The condition rating is expected to be unchanged(and was), but it rapidly becoming irrelevant with harvest accelerating.  Weather forecasts are good, with significant rain only expected in the N. Plains. 

***** Tech Comment: Dec corn’s reversal up to start the week was a good sign, but not necessarily one that will lead to a new high in the short term without some unexpected positive news.  To even suggest prices might challenge last week’s high, Dec. needs to close over $3.87 1/2.  Even then, it takes a close over last week’s $3.95 high to position the market to challenge $4.00-$4.03 resistance.  But Dec. did hold support at $3.73.  If prices are going to head lower for a test of support at $3.60, and maybe test the more significant support in the $3.46-$3.50 range, it needs to close under that.  As we said last week, there is a chance, albeit not yet strong that Dec. corn is trying to turn up out of an early 20-week low.

***** Basis Trends:  Gulf +37 – up 2, Eastern Corn Belt – dn 4/stdy, Western Corn Belt – dn 8/up 3.

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