Commentary
Corn futures chose to follow the soybean market in today’s session after decoupling from the wheat market recently. That was largely due in my opinion to the weather outlook into month end. It is forecasted to be hot and dry across much of the Midwest the next two weeks, putting crops under potential stress as the corn crop finishes grain fill and soybeans try to set those final pods. Dec 23 corn experienced a low volume session with the total contracts transacted only reaching 120,000 contracts today. Open interest has been increasing in the corn market recently, as we inch closer to harvest, and as the charts move from the upper left to the lower right. Corn as previously mentioned will need help from rallies in beans and wheat in our view to be bought at these levels. The USDA had the corn carry-out in last Fridays report at 2.2 billion bushels, so in my view the bulls are going to need something bullish to enter into the market. That could be weather or the war. One story that was largely dismissed were the reports that Russian drone attacks continue to bombard Danube ports with the Ukrainian port of Reni being targeted overnight. Black Sea news has been relatively absent this week outside of last night’s port attacks. Chicago wheat funds are estimated net short 84,000 contracts. The annual Pro Farmer Midwest crop tour is scheduled to take place next week in the middle of a weather story, providing us our first significant look at this year’s crops. Technical levels for the remainder of the week come in as follows. Resistance is just above todays close is at 4.84. A strong close above and its 5.06/07. A close above here and look for funds to push Dec Corn to the small gap at 5.25. (See arrow on chart.) However, a failure at 4.84 with consecutive closes under could push the market back to 4.74 which represent 30- percent lower for year. This week’s low so far is 473.4, which tells me funds most likely short covered some at this level as beans rallied last night into this morning. However, a close below 4.74 and its katy bar the door to 4.52 which is the bottom edge of the Bollinger Band and if that level can’t hold, the next level of support is at 4.40 which represents 35% lower for year.
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Sean Lusk
Vice President Commercial Hedging Division
Walsh Trading
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