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NEAR-TERM MARKET FUNDAMENTALS: The corn market extended Monday’s gains during yesterday’s session and then moved back up near yesterday’s highs overnight. Traders said that the corn market was boosted by a lower dollar and modestly higher crude oil market overnight. The week has started with two straight days of substantial fund buying in corn. One trader noted that some of this support from funds came when the dollar was trading higher which is considered especially supportive by some traders. Harvest progress is starting to pick up in corn as fields dry out this week and some farmers are starting to finish up with soybeans. However, the soybean harvest is still well short of being complete overall and analysts indicate that this should cause the corn harvest to continue to lag until next week despite a generally dry forecast through this weekend. A band of light-to-moderate showers are still expected in the Midwest early next week followed by another dry spell to end next week. Brazil’s trade ministry reports that corn exports for the month of October were 817,900 tonnes, up from 716,300 tonnes the previous month and up sharply from just 398,900 tonnes in October, 2008. One analyst noted that this contrasts with lower exports last month in soybeans. He added that this reflects the aggressive pace of export sales for US soybeans which are in relatively short supply in South America. Corn supplies there are nearer normal which has helped keep US export sales on the soft side in corn.
TODAY’S GUIDANCE: Investors want to own corn, and that may be all that the bull case in corn requires at this point. Dry weather will get farmers into the corn fields by the end of this week, but they will be lucky to get to 50% harvested by the middle of next week and this will subject the crop to continued damage, high moisture and mold if it gets too warm. Traders are nervous over next Tuesday’s USDA Crop Report which could show a decline in yield and production. Even if that is not the case, test weights may be down in some areas. This may be enough to propel the December contract to 434 as next technical objective. First support is at 378 to 380 in the December corn contract with resistance at 403 1/2 and then 413 1/2.
