Commentary
Second day in a row that corn traded in a very narrow 4 cent range. Lack of conviction on both sides as the market possibly awaits Pro Farmers findings later in the week. There were mixed results on Monday in Ohio and South Dakota. However Pro Farmer sample averages broke tour records yesterday. Indiana’s sample average is 187.5 bushel per acre versus 180.9 last year and vs the 184.1 three-year average. The USDA had Indiana at a record 203 bushels per acre last year. Nebraska’s sample average is 173.25 vs 167.25 last year and vs 169.4 averaged over the last three years. The crop tour moved through western Iowa and parts of Eastern Illinois today. USDA put Illinois at 225 bpa in its August report, so we will see if the tour meets or even beats USDA’s expectations. The question moving forward for me is, can this crop get bigger? Yield nationally is at 183.2 bpa, but can it push 184 to 185 with a surge in ending stocks past 2.3 billion? If weather turns warm and dry late, recent history says it can. 6-to-10-day forecasts turn hotter and drier while the 11 to 15 day stays warm with better rain chances. Weather remains ideal for now in my opinion. Longer term there are some bullish tidbits hitting the wire. The Buenos Aires Exchange says corn acreage will fall at least 17% due to leaf hopper infestations. This would cut 1.2 million hectares of planted acres. Repeating last year’s yields in Argentina would cut 8.5 million metric tons of production. However, Brazil’s corn growing areas may grow by 4 percent versus last year, and with trendline yields would add 5 million metric tons possibly to their output. A strong La Nina re-emerging this upcoming SA growing season would cause significant more damage than the leaf hopper epidemic in my opinion. Dec corn has resistance at 4.00 and then 4.12 the rest of the week. A close above 4.12 this week and the market could push to 4.24. Support is 392 and then 3.88. A close under 3.88 and its 3.76. Under 3.76, its katy bar the door to 3.53.
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Sean Lusk
Vice President Commercial Hedging Division
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