Commentary
The buy the dips mentality remains in my view following the January 12th supply and demand report. The big surprise for corn came out friendly that aided the corn and beans higher. They lowered the corn acres 1.5 million despite raising the yield .8 bushels per acre. Stocks to usage is at 8.9 percent, second lowest since the drought year of 2012. With Brazil’s exportable 2nd crop safrinha corn still yet to be planted as it waits for beans to be harvested, the market focuses on Argentina, and dwindling supplies from the Ukraine. Due to a continued LA Nina drought, Argentina’s corn crop of what’s in the ground is abysmal. With 83 percent planted as of last week, the Buenos Aires Grain Exchange lowered projected plantings 200K acres. Albeit early, the condition reports show the good to excellent condition at just 13 percent vs 41 last year. There is trouble and worry for this crop, but weather can flip flop through the growing season bringing a cooler and wetter pattern that would remove any weather premium built in in my opinion. I included a weekly corn chart. We are at major resistance at 6.88/89 for March 23 corn. A close over in my view could potentially move the market to the 5% threshold higher for the year at 7.12. A close above that level and the market could challenge the gap at 7.28. Support is 6.75. A close under and the next downside targets are 6.57 and then 6.42.
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