Commentary
December corn futures traded up to a 4 week high at 5.41 before an abrupt turnaround sent futures to trade down to support off of 5.32, which represents the ten percent higher on the year threshold. Harvest pressure and double digit losses for both beans and wheat aided corn’s decline in my view. USDA yesterday reported the U.S. corn crop was 18% harvested as of Sept. 26, up from 10% the previous week and above the five-year average of 15% for this date. USDA today announced a 150,000 MT daily corn sale to Mexico for 2021-22 delivery. USDA’s Sept. 30 Quarterly Grain Stocks Report is expected to show Sept. 1 corn stocks at 1.155 billion bu., which would be down 40% from a year ago, and the smallest Sept. 1 stocks figure since 2013. The range of guesses for on farm stocks is 998 million to 1.252 billion. It’s truly anybody’s guess on what the USDA will come out with on Thursday, but keep in mind the average trade guess is the lowest on farm stocks number since 2013 and in my view is priced into the market. That said, the 220K managed money longs have defended their position on breaks this crop season as there is a lot of talk of yields being lowered for corn in the October and November WASDE reports. If the USDA raises on farm stocks versus expectations, the bulls will get tested as harvest progress advances in the Midwest. Longer term I am looking to be a buyer of breaks as I believe the balance sheet will be tight for months. That doesn’t mean we cant see a correction in the near term if key support levels at 5.13 and 4.97 are breached. That assumes we get a break. A close over 555 December corn, may push the market to 574.
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