AgriVisor Corn Advice

Friday, June 03, 2016
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Fundamental Analysis:
 The corn market is following the lead of the soybean market, but doesn’t have the speculative interest that soybeans and soymeal does.  Meanwhile, corn lost some ground relative to the other two, with the slippage versus meal in particular helping sustain maximum use of corn in feed rations.  We continue to think the acreage will slip modestly, but more in line with the +/-1.5 mln. acre level.  The warmer, drier weather is a positive for the corn crop, but only so long as it doesn’t turn into an extended pattern.  And there’s risk of that given the continued abatement of Pacific Ocean temps.  There is a bit higher downside risk for yields, but there’s still a lot of uncertainty at the moment.  Problems continue to build slightly in Brazil.  One private house thinks their exports could be off as much as 7 mmt. this year, a level that should bolster demand for feedstuffs elsewhere in the world.  Somewhat wet conditions, and the focus on soybeans is keeping the Argentine harvest a little slow as well.  Export sales are expected to total 1.0-1.5 mmt. tomorrow.  The level of unshipped sales continues to build, worrying some, but there is a lag with buyers needing to get ships booked and scheduled.  

Tech Comment: July corn didn’t do anything overtly negative, but the inability to sustain gains and the poor action at the close hinted prices pay struggle before attempting to move higher yet.  July had an interim high at $4.20 last fall, a point it failed to get through.  Still, the primary target on July is $4.25, with last year’s $4.39 high on the nearby chart and $4.50 likely to be tough resistance levels. With this week’s action leaving a $4.01 low, it has made the $4.00 level an important short term support point.  If that fails, look for prices to turn sideways into the next 6-7 week low due at the beginning of July.  Under $4.00, support comes in the $3.90-$3.95 range, with a possibility prices could slip back to $3.85.

Basis Trends: Gulf +33 – stdy, Eastern Corn Belt – stdy/up 2, Western Corn Belt – dn 4/stdy.