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NEAR-TERM MARKET FUNDAMENTALS: Corn traded higher yesterday and made a surge into new highs from late morning through the close. Traders indicate that this came on heavy buying by funds amid light farmer selling and strong export demand for corn. Hanging over it all is this week’s wet weather forecast for much of the Midwest with more of the same expected on and off during at least the first half of next week. The system that is currently moving through the Midwest is comprised of showers and storms that could produce as little as 1/4 inch and locally heavier amounts of 1-3 inches. All of this is expected to slow planting and fieldwork in corn through next week. The Buenos Aires Grains Exchange released its latest weekly crop estimates yesterday. They pegged the corn crop at 13.0 million tonnes, unchanged from the previous week despite a sharp drop in their soybean estimate. Light rain is expected in southern Russia and parts of Ukraine this week. This would be welcome as the area is dry and the combination of cool weather and dryness is causing some planting delays in Russia. Today is first notice day against May futures contracts. Corn deliveries were 431 contracts, about in line with trade expectations. The USDA will release its latest Export Sales Report this morning. Traders are looking for a number near 1 million tonnes in corn.
WEATHER: The US weather forecast is much the same as yesterday. Rains are expected across a wide swath of the Midwest today with locally heavy amounts of 1-3 inches. This should be focused tomorrow along a band running from Missouri through Illinois and Indiana into northern Ohio. The southern Midwest may see further rains on Sunday with a back-and-forth rain system hitting much of the Midwest from Monday through at least the middle of next week. Rain and snow is expected in the northern Plains today with rains also hitting the central and SE Plains. The northern Plains should then clear with the southern Plains getting coverage on-and-off into the middle of next week.
TODAY’S GUIDANCE: The most important question before the market as we approach the end of the week is, what will farmers do now that we are at or above $4 in old crop futures contracts and a number of local cash markets? In late March and early April, the $4 area attracted increased farmer selling nearly every time that the market pushed above that level. However, the month of May is shaping up differently. First, there does not seem to be a consensus about selling at this level as there was leading up the March highs. Second, farmers are busy with planting, fieldwork, and myriad other activities associated with the planting season. Wet weather may keep them indoors at times, but it is not the same as late winter. On the demand side, export sales have been very strong and we will see the latest numbers this morning. China has been sidelined from the corn export business for more than a year, and Argentina may also be sidelined if the corn crop they are currently harvesting drops much below 12.0 million tonnes as seems likely. This leaves the US with limited competition for now. The result may be that the July contract will push through the band of resistance running up to near 415. First support is at 395 in the July contract. First resistance is at 406 to 408 1/2 with the next resistance at 415.
