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Commentary
May corn prices made another new 16-month high this morning but closed with a reversal lower on spillover weakness from wheat in my opinion. Funds flipped to the sell side amid some profit taking in my view. May futures are now the most actively traded contract. just short of gap resistance from early January of 2024 which would be filled at 519 1/2. Private Crop scouts raised their Argentine crop estimate slightly to 47.9 million tonnes, compared to USDA at 50, the Rosario Grain Exchange at 46 and the Buenos Aries Grain Exchange at 49. They cited beneficial rains in the eastern crop areas as the reason for the increase. US corn prices have risen above South American origin, but Brazil and Argentine exports typically remain low until late May/early June when harvested supplies become widely available. It is my belief that the rally since mid-October is getting a bit long in the tooth as prices have rallied nearly $1.00 a bushel. May corn has reached initial upside objectives and today’s reversal lower may be the initial technical signal that this rally has run its course for now. We are inching closer to month end and outlooks for future production (Ag Forum) and crop insurance dates, may steal some headlines and create some profit taking among trend followers and managed money as first notice for March beans is also at month end. May corn sees support at 4.99/5.02 for the remainder of the week, with stiff resistance at 519 and just above at 525. I look for prices to back off some then return to go bid into the March WASDE report. The fear there in my opinion will be another cut to ending stocks as demand continues to impress and outpace USDA expectations. If May can retreat back to near 5.00, I would consider call strategies into the March WASDE on March 11, 2025.
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Sean Lusk
Vice President Commercial Hedging Division
Walsh Trading
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