AgriVisor Corn Advice

Thursday, May 19, 2016
Fundamental Analysis: Thursday was a day with prices mostly buffeted by outside forces, not forces germane to the corn market in particular.  Notably, selling pressure in most of the investment medium, corn included came from talk the Fed might raise interest rates at their June meeting.  Most of the fresh anxiety about that came from gleaning the meeting notes that were released on Wednesday.  For corn specifically, the short term improvement in weather, the eastern Corn Belt in particular, into early next week is expected to allow planting to move to completion, with the warmer temperatures stimulating faster growth for the newly emerged crops.  The weekly export sales, 2.01 mmt., were a little higher than anticipated, but not totally shocking either with the persistent talk about the problems with the second crop in Brazil.  The hard break will shut off producer sales, but merchants/end users had become adequately supplied for the short term on the rallies over the last few weeks. 

Tech Comment: July continues to move up, breeching $4.00, and closing over the last reaction high at $3.95 for the 2nd time.  It remains positioned to test the last high on the nearby chart at $4.02 and July’s mid-April high at $4.07.  A close over the latter two, but especially $4.07, could set off a flurry of fund buying, potentially carrying July to $4.22, and maybe last summer’s $4.39 high on the nearby chart.  Still, those mid-April highs could be formidable, especially if leadership from the soybean market starts to abate.   If this rally fails to overcome those mid-April highs, there’s a chance July could set back and test the low it posted last week at $3.68.  A drop under $3.88 would certainly indicate the short term trend has become more defensive. Still, the longer term picture continues to look more positive no matter the short term action.

Basis Trends: Gulf +30 – dn 2, Eastern Corn Belt – dn 5/up 1, Western Corn Belt – dn 3/up 6.