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NEAR-TERM MARKET FUNDAMENTALS: The corn market only managed a modest bounce yesterday despite the combination of relief over an apparent resolution of the financial crisis in the Euro Zone and the release of a USDA supply/demand report that was considered supportive in corn. This has some traders concerned that the corn market may not have established a bottom ahead of the planting season. The USDA lowered 2009/10 US corn ending stocks to 1.719 billion bushels yesterday, down 45 million from last month as compared with expectations for a drop of just 20 million bushels. Exports were lowered by 50 million bushels, and this reflected the ongoing lag in export sales and export inspections versus the 5-year averages in those figures at this point in the marketing year. This was in contrast to a 100 million bushel increase in projected ethanol usage to 4.3 billion bushels, with ethanol now representing 32.7% of total projected US corn usage. The need to raise the ethanol number was signaled by the strong pace of ethanol production through November, which is the latest date for which we have an official US production total. In addition, the release of the new EPA guidelines for ethanol production in the US last week has removed any concern that the government will impose significant environmental restrictions on corn-based ethanol production over the next few years. The USDA pegged world ending corn stocks for 2009/10 at 134.04 million tonnes, down from 136.2 million tonnes last month. The increase in projected usage for ethanol in the US resulted in an upward revision in world usage that more than offset an increase of 2.2 million tonnes in the Argentine corn crop. This left the world stocks/usage ratio at just 16.6%, the third lowest in 33 years.
TODAY’S GUIDANCE: Yesterday’s news was somewhat supportive in corn and this may enable the market to push to near last week’s highs or a bit higher over the near term. However, there is no indication that corn has formed a bottom and the raises the distinct possibility that the May contract could push as low as 340 to 350 over the intermediate term.
TODAY’S MARKET IDEAS: Selling resistance for May corn is at 377 1/4 and 381 1/2 with 352 3/4 as next downside objective. The world numbers are still relatively tight and the market will need to see a big jump in acres to avoid tightness in the coming season but weakness in soybeans and wheat could drag the market lower into the end of the month.
Corn Market Commentary – 2010.02.10
by Terry Roggensack on February 10, 2010
Below is a sample of our Daily Commentary. To get this comment, and our daily coverage of 15 additional markets and trade ideas, visit futures-research.com for your free 2 week trial!
NEAR-TERM MARKET FUNDAMENTALS: The corn market only managed a modest bounce yesterday despite the combination of relief over an apparent resolution of the financial crisis in the Euro Zone and the release of a USDA supply/demand report that was considered supportive in corn. This has some traders concerned that the corn market may not have established a bottom ahead of the planting season. The USDA lowered 2009/10 US corn ending stocks to 1.719 billion bushels yesterday, down 45 million from last month as compared with expectations for a drop of just 20 million bushels. Exports were lowered by 50 million bushels, and this reflected the ongoing lag in export sales and export inspections versus the 5-year averages in those figures at this point in the marketing year. This was in contrast to a 100 million bushel increase in projected ethanol usage to 4.3 billion bushels, with ethanol now representing 32.7% of total projected US corn usage. The need to raise the ethanol number was signaled by the strong pace of ethanol production through November, which is the latest date for which we have an official US production total. In addition, the release of the new EPA guidelines for ethanol production in the US last week has removed any concern that the government will impose significant environmental restrictions on corn-based ethanol production over the next few years. The USDA pegged world ending corn stocks for 2009/10 at 134.04 million tonnes, down from 136.2 million tonnes last month. The increase in projected usage for ethanol in the US resulted in an upward revision in world usage that more than offset an increase of 2.2 million tonnes in the Argentine corn crop. This left the world stocks/usage ratio at just 16.6%, the third lowest in 33 years.
TODAY’S GUIDANCE: Yesterday’s news was somewhat supportive in corn and this may enable the market to push to near last week’s highs or a bit higher over the near term. However, there is no indication that corn has formed a bottom and the raises the distinct possibility that the May contract could push as low as 340 to 350 over the intermediate term.
TODAY’S MARKET IDEAS: Selling resistance for May corn is at 377 1/4 and 381 1/2 with 352 3/4 as next downside objective. The world numbers are still relatively tight and the market will need to see a big jump in acres to avoid tightness in the coming season but weakness in soybeans and wheat could drag the market lower into the end of the month.
Tags: Corn, Grains
About Terry Roggensack