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Commentary
Corn futures were under pressure all session to end another volatile week in the grain complex. Tariffs and renewed trade war threats are one of the culprits for the withdraw of the sizable net long corn position. Secondary has been more agreeable weather in Argentina where recent rains saved the crop from significant production losses. Good to excellent conditions in Argentina are at 30%. This rating is above 3- and 5-year averages with 8 percent of the crop harvested. Can weather still impact South American production? The answer is yes. Brazil produces almost 2.5 times the corn Argentina does and funds will be watching weather there amid increased old crop US demand. USDA maintained its projection of the Brazilian corn crop at 126 million metric tons (MMT) last week, but that may come down as both Conab and private crop scouts have posted estimates around 123 MMT. Conab’s forecast of Brazilian corn exports is also 10 MMT below USDA’s 44-MT figure. Moreover, Brazil’s hugely important safrinha crop has only just been planted and is already facing weather concerns. New-crop US futures are almost surely facing huge, planted acreage estimates in the near term, but look for tariff- and trade-related news to continue dominating old-crop price action along with old crop domestic demand. Funds in the last COT report showed managed money jettisoning 53K longs while shorts added 20K for a 73K decrease in the net long position. This brings the net long down to 146K as of this past Tuesday. That’s a 200K drop from the net long seen in early February approximately. May corn next week has support at 458/57, essentially the weekly settlement. Consecutive closes under this level could send the market near the recent low at 443 and then 439 to 435. Resistance is the 100-day moving average at 467. A close over and its 480/82. We need to clear this area to trade back to major resistance at 5.00/5.03.
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Sean Lusk
Vice President Commercial Hedging Division
Walsh Trading
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