Commentary
Corn futures finished their first weekly decline in three weeks in a continued corrective pullback from the sharp gains to start the week. USDA’s next Crop Production Report Nov. 9th is expected to show a small increase to the projected U.S. crop and average yield. Corn production is expected to total 15.05 billion bushels per Reuters which is up from USDA’s current estimate of 15.019 billion bushels. The estimated average nationwide yield is expected to increase to 176.9 bu. per acre, up 0.1 BPA from last month. Rain in Argentina over the past week helped propel 2021-22 corn sowing, the Buenos Aires Grains Exchange said yesterday. Argentine growers have planted 28.4% of land expected to be planted with corn this season, with the harvest expected at 55 MMT.
It is my belief Corn needs both the inflationary undertone in the market along with the wheat market to hold in here to sustain 5.40/5.50 corn. If the dips are bought and funds don’t dump their 240K long in the market, I think we could potentially run to 6.00. We haven’t seen any harvest pressure emerge to date in my view, as recent breaks below 5.10 have become buying opportunities. A tight South American crop may have had something to do with that coupled with wheat futures hitting ten year highs. The problem longer term for corn as I see it comes on two fronts.. First, per the USDA, the US has over 900 million bushels left to ship for the 21/22 marketing year. Half that number are sales to futures shipment to China. While its very early in the marketing year with 43 weeks left in it, should we reach the end of February or early March with a large amount of bushels unshipped, I believe the talk or fear in the market maybe is that China will cancel those shipments for cheaper South American supplies which results in increases in the carry-out. Second, both Brazil and Argentina without weather events, could grow massive crops amid higher planted area. Those crops would be harvested late Spring and early Summer, possibly easing the global balance sheet. The results of these concerns are down the road and not present now. Today was the first day of the Goldman Roll, and all grains aside from Oats all finished in the red today. Technical levels for next week come in as follows for December Corn. Resistance is up at 557.2. A close over and it’s the 5.79/80 level. A close above and its 6.03 in my opinion. Support is first at the 50 day MA on the weekly continuous at 550. If that doesn’t hold, the next level of support is at 5.32. then trendline support at 5.26. Under 5.26, next support is 5.07 and then 492.2.
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