Grain Spreads: Dec 21/22 Corn

Sean Lusk General Commentary Leave a Comment


New crop December corn futures traded down to 5.00 this AM before bouncing by mid-morning and rallying 20 cents into the close. Buyers bought with both hands at the 5.00 level and that represents key support for me. With a close under I think new crop down side targets come in at 4.84 which would put new crop corn unchanged on the year. Below that support would come in at the gap at 4.78 and then 4.60 which is 5 percent down for the year. 4.36 would eb the next level of key support in my view, which is 10 percent down for the year. While the Dec 21 corn market has dropped to 1.38 from the early Amy high to this morning’s low, I don’t think we will see any sizable move deep below the 5.00 level and test my downside targets until we get past the June 30th planting intentions report. The range of estimates are all over the pace with everybody guessing that we come in higher than the 91.14 million acres the USDA came up with in the March report. The average trade guess into March was approximately 93.2 million acres. 2.2 million less than what the market was expecting. I’ve seen he range of estimates all the way up at 96 million acres for June according to some crop scouts. I think we will be getting enhanced volatility into that report, but that report is 4 weeks out.

Until then we should see some volatile movement continue. I included the Dec 21 /Dec 22 corn spread. The spread has fallen from 1.12 Dec 21 over to 37 cents Dec 21 over in the last few weeks. A 75 cent drop in a short amount of time. A close under the morning low and it looks to me like Katy bar the door to 10 cents Dec 21 over. However a close over 70 cents Dec 21 over could send the spread to the early May highs over 1.12 over. Keep an eye out here. It’s my opinion that the spread won’t hang out the 50 percent retracement level at 48 cents Dec 21 over for much longer.

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Dec 21/Dec 22 Corn

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