Corn values sagging in early trade, with the May 15 contract currently trading at 3.72 ¼ lower by 5 ¾ cents with the new crop contract at 3.96 ¼ down 5 cents, pegging the May 15 vs. Dec15 (Old crop / New crop) spread at 24 cents.
The Funds continue to add to their short position, now being short an estimated 55k contracts; in the bigger picture, they seem to be preparing for a short covering bounce, possibly triggering a release of much-needed stocks from Producers. Planting progress data indicated farmers “catching up” in some key areas but still lagging and behind compared to last year. Corn plantings gained 7 percentage points, being penciled in at 9% compared to 2% last week and 13% YTD. As a note, Texas is running nearly 10% behind the normal pace, and preventative planting insurance dates are now looming. Talk amongst the trade is that weather may create some hope for a bounce to the higher end of the current trading range, with models showing continued rains throughout the Midwest starting as soon as tomorrow. Basis continues to slowly firm in concentrated areas. Factors to keep your eye on are that the U.S. dollar remains strong, which puts in place resistance for U.S. exporters, and inexpensive crude oil prices could keep a peg on growth in ethanol production. Also of note is that producers still hold a record supply of old crop bushels in storage, and the forecast is that they will still plant many corn acres this year.
Technically, corn futures look weak as values continue their long-term downtrend and with little substantial fundamental news to bolster prices. Currently, futures are trading below all key moving averages (20, 50, 100-day), with volatility still lessening after peaking in January but still in a higher range. Look for short-term support to be at the 3.71 area and resistance in the 3.82 area.
Corn (May 15):
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