(May 15): Futures – Corn values sagging in early trade with the May 15 contract currently trading at 3.72 ¼ lower by 5 ¾ cents with the new crop contract at 3.96 ¼ down 5 cents pegging the May15 vs. Dec15 (Old crop / New crop) spread at 24 cents.
The Funds continue to add to their short position, now being short an estimated 55k contracts, in the bigger picture they seem to be preparing for a short covering bounce which would possibly trigger a release of much needed stocks from Producers. Planting progress data indicated farmers “catching up” in some key areas but still lagging and behind compared to last year. Overall corn plantings gained 7 percentage points being penciled in at 9% compared to 2% last week and 13% YTD. As a note Texas is running nearly 10% behind normal pace and preventative planting insurance dates are now looming. Talk amongst the trade is that weather may create some hope for a bounce to the higher end of the current trading range with models showing continued rains throughout the Midwest starting as soon as tomorrow. Basis continues to slowly firm in concentrated areas. Factors to keep your eye on are that the U.S Dollar remains strong which puts in place resistance for U.S. exporters, and inexpensive crude oil prices could keep a peg on growth in ethanol production. Also of note is that producers still hold a record supply of old crop bushels in storage and the forecast is they will still plant a large number of corn acres this year.
Technically, corn futures look weak as values continue their long term downtrend and with really no substantial fundamental news to bolster prices. Currently futures are trading below all key moving averages (20, 50, 100 day), with volatility still lessening after peaking in January but still in a higher range. Look for short term support to be at the 3.71 area and resistance in the 3.82 area.
Corn (May 15):
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