The corn market has stubbornly rejected recent lows of support at the 530/532 area this week. Funds are long over 250K contracts as we near harvest, a sizable and confident position prior to potential seasonal harvest weakness. What is the market telling us? Into month end and a three day holiday Labor Day weekend upcoming, caution is advised here. I included a Dec 21/Dec22 corn spread chart. The spread has been trending lower since the Spring featuring lower highs and lower lows. Even the surprise August WASDE report that had the USDA projecting corn yield a whopping 4.9 bushels per acre less than the month prior couldn’t drive the Dec 21/22 spread to the gap made in early July at 74.4. Does either outright December corn or this spread have legs or will it succumb to producer selling and a fund unwind of longs? Global importers are starting to pick up new-crop corn, including reported sales to Colombia and Mexico this week; cumulative corn sales are strong heading into the new marketing year. In my view it’s mostly attributed to China’s massive 2021/22 purchases this Spring. Mondays condition report will be eyed for any higher crop ratings given the added moisture received in the Midwest the second half of August. Global supplies are tight here as Brazil’s secondary corn crop got decimated by drought and then frost. Watch September 21 corn as a clue in my view. It traded back to an inverse versus December settling at 4.2 cents over December. If the September contract races up to and through 6.00 past first notice Day on Tuesday (8/31), I look for December corn to follow and for the Dec21/Dec22 corn spread to trade higher as well in my opinion.
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