***** Fundamental Analysis: There wasn’t a lot of fresh news for the trade to work with to start the week. Export inspections, 14.7 mln. bu., were a little disappointing, but not enough to generate any fresh trading. The sale of 1.44 mmt. of corn to Mexico played a part in the mix as well. As we implied last week, the fact prices couldn’t find any additional downside traction following the larger production estimate, the performance fit with the possibility prices are at, or close to, lows. As for export inspections being slow, this has become a seasonal low point for weekly shipments the last few years, with spring/summer activity now the best of the year. Meanwhile, producer selling continues to be light. At some point, they will need to turn inventory into cash, but given these prices, we believe producers will only sell grain as they need money. While that doesn’t necessarily push prices lower, it will keep a lid on rallies unless a situation develops to bring explosive strength, and that is usually a supply side situation. A problem with the 2nd crop out of Brazil might be the first opportunity for that, and that may not come until Feb/March. Corn harvest is winding down. The trade looks for it to be 96%; the USDA reported 96%.
***** Tech Comment: Corn futures are nearing the end of the window for the 20-week low. Dec. still doesn’t display any follow-through from the report break, hinting a low may be coming soon. Spreads are flattening out a little as well, a hallmark suggesting a low could be coming. But at the least, the March contract needs to close over the small post-report high of $3.71 to give the bears pause to keep pressing the issue. And Dec. is not far away from the major support at $3.47-$3.50 on the nearby chart, a level that’s shown remarkable ability to support the market since prices put in the 5 ½ year low last fall. The CFTC report indicated hedge funds expanded their short positions last week.
***** Basis Trends: Gulf +53 – dn 1, Eastern Corn Belt – stdy/up 3, Western Corn Belt – dn 2/up 5.
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