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NEAR-TERM MARKET FUNDAMENTALS: December corn rallied past its July highs to its highest level since January 13th yesterday, but retreated to close lower on the day. Traders said that a surge in wheat, crude oil and equities contributed to yesterday’s buying enthusiasm in corn. However, one trader noted that a lack of demand in nearby cash markets and selling by funds in futures after the early rally were factors that contributed to the late sell off. More rain is tracking in from the far western Corn Belt through Iowa and into northern Illinois this morning. Most of this rain is unwelcome as many fields in the affected areas are at or near saturation levels. Today’s forecasts call for moderate temperatures in the western and NW Corn Belt and on east through northern Illinois and northern Indiana. Temperatures south of this area are forecast in the 90s with 100 degree plus levels expected in Arkansas, Louisiana, Western Tennessee, in the area near St. Louis and in much of Mississippi. The 100-degree air mass is expected to shift slightly to the east and north tomorrow as it remains pressed between the cool air system in the northern Midwest and unstable tropical air in the Gulf. This week’s Crop Progress report from the USDA pegged the good-to-excellent rating for the US corn crop at 71%, down from 72% last week. This compares to 68% last year and a 10-year average of 62%. Some traders are already looking for further deterioration next week due to excessive rains in the western Corn Belt and excessive heat in the central and southern Corn Belt this week. Silking stands at 93% as of Sunday compared to a 5-year average of 86%. This week’s export inspections for corn were 31.5 million bushels, down from 42.8 last week. Inspections need to average 54.6 million each week to reach the USDA’s export projection for the 2009/10 marketing year. Traders indicate that Japan has booked less than half of its corn import needs for the 4th Quarter, leaving over 2 1/2 million tonnes still to be booked. The USDA agricultural attache in South Africa expect this year’s corn crop to increase by 10.7% to 13.9 million tonnes. South African exports are pegged at 2.5 million tonnes in 2010/11. The USDA announced a sale of 232,000 tonnes of corn for unknown destination.
TODAY’S GUIDANCE: A number of commodity markets saw reversal type action yesterday and this may keep the pressure on in corn despite a weakening dollar. Shippers and importers show no signs of accelerating the pace of corn shipments over the short term and US weather is still favorable enough to generate a trend line yield near 163.5 bushels per acre. Still, the trend is turning higher in a number of markets and lower prices in corn should bring an increased pace of bookings by importers such as Japan and possibly China. First support in the December contract is at 395 to 396 1/4 and then near 390. Resistance is at 410 and 418.
TODAY’S MARKET IDEAS: Buy December corn on a dip to the 397-392 zone with 423 as next objective.
Corn Market Commentary – 2010.08.03
by Terry Roggensack on August 3, 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: December corn rallied past its July highs to its highest level since January 13th yesterday, but retreated to close lower on the day. Traders said that a surge in wheat, crude oil and equities contributed to yesterday’s buying enthusiasm in corn. However, one trader noted that a lack of demand in nearby cash markets and selling by funds in futures after the early rally were factors that contributed to the late sell off. More rain is tracking in from the far western Corn Belt through Iowa and into northern Illinois this morning. Most of this rain is unwelcome as many fields in the affected areas are at or near saturation levels. Today’s forecasts call for moderate temperatures in the western and NW Corn Belt and on east through northern Illinois and northern Indiana. Temperatures south of this area are forecast in the 90s with 100 degree plus levels expected in Arkansas, Louisiana, Western Tennessee, in the area near St. Louis and in much of Mississippi. The 100-degree air mass is expected to shift slightly to the east and north tomorrow as it remains pressed between the cool air system in the northern Midwest and unstable tropical air in the Gulf. This week’s Crop Progress report from the USDA pegged the good-to-excellent rating for the US corn crop at 71%, down from 72% last week. This compares to 68% last year and a 10-year average of 62%. Some traders are already looking for further deterioration next week due to excessive rains in the western Corn Belt and excessive heat in the central and southern Corn Belt this week. Silking stands at 93% as of Sunday compared to a 5-year average of 86%. This week’s export inspections for corn were 31.5 million bushels, down from 42.8 last week. Inspections need to average 54.6 million each week to reach the USDA’s export projection for the 2009/10 marketing year. Traders indicate that Japan has booked less than half of its corn import needs for the 4th Quarter, leaving over 2 1/2 million tonnes still to be booked. The USDA agricultural attache in South Africa expect this year’s corn crop to increase by 10.7% to 13.9 million tonnes. South African exports are pegged at 2.5 million tonnes in 2010/11. The USDA announced a sale of 232,000 tonnes of corn for unknown destination.
TODAY’S GUIDANCE: A number of commodity markets saw reversal type action yesterday and this may keep the pressure on in corn despite a weakening dollar. Shippers and importers show no signs of accelerating the pace of corn shipments over the short term and US weather is still favorable enough to generate a trend line yield near 163.5 bushels per acre. Still, the trend is turning higher in a number of markets and lower prices in corn should bring an increased pace of bookings by importers such as Japan and possibly China. First support in the December contract is at 395 to 396 1/4 and then near 390. Resistance is at 410 and 418.
TODAY’S MARKET IDEAS: Buy December corn on a dip to the 397-392 zone with 423 as next objective.
Tags: Corn, Grains
About Terry Roggensack