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NEAR-TERM MARKET FUNDAMENTALS: Traders said that the hard break in crude oil yesterday and ideas that the economy may not be starting to recover just yet brought fund selling and large-scale liquidation by commission houses in corn yesterday. However, farmers did not increase selling in corn yesterday as appeared to be the case with soybeans. Traders also noted that the late recovery in corn came as spreaders unwound short positions in corn versus long positions in soybeans and to a lesser extent in wheat. Weather remains a major issue with cool temperatures dominating the Midwest today. A push of warm air from the south is expected to start by tomorrow, with above normal temperatures expected to dominate the corn, and wheat belts by Friday, followed by a return of cool air this weekend. The weekly Corn Planting Report showed 5% complete compared to 2% last week and 4% last year. This was at the low end of trade expectations. The 10 year average for this time of year is 12%, although the 5-year average is a bit higher at 14%. The highest percent complete as of this date was 22% in 2004 while the lowest was just 2% in 1993. Traders are looking for planting to advance in the western Corn Belt this week, with the eastern belt seeing more rapid planting progress by late this week. Corn demand from East Asia remains strong with a South Korean feed association buying 110,000 tonnes of US corn today. This week’s export inspections were 38.011 million bushels versus 33.327 last week. Total inspections to date stand at 61.3% of the projected total versus a 5-year average of 60.9% Inspections need to average 33.384 million each week to reach the USDA’s projection.

WEATHER: The main weather story in the US is the surge of cool air that is dominating virtually all of the Midwest and Plains today and pushing down as far as the northern Delta. However, this is expected to start changing by tomorrow with a massive surge of warm air moving in from the south southwest that should cover most major growing areas in the Midwest, Plains and Delta by Friday. Cooler air is then expected to push into the northern Plains starting on Friday and into the Midwest by this weekend. There was some slightly supportive news of a South Korean purchase of 110,000 tons of US corn this morning.

TODAY’S GUIDANCE: Corn has been the leader to the downside versus soybeans and meal since early April, but that may have changed late in the session yesterday. Traders said that the late recovery in corn futures coupled with late new lows for the day in July soybeans, were the result of unwinding of soybean/corn spreads. This may be a signal that a further correction of the spread versus soybeans is in order. Soybeans have gained sharply on the ratio versus corn since mid March on strong export demand, and we may see a retracement of up to half way back. Corn futures are oversold regardless of the spread, and basis levels have remained steady to higher for corn over the past two days. First support is at yesterday’s low at 370 in the July contract. The next support is at 360. Resistance is now at 387 1/2 and again near 395.

This content originated from – The Hightower Report.