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The March corn rejected a move above $4.00 in Mid-December mainly due to weak domestic demand news, speculative selling and ideas that feed alternatives would continue to keep export news for corn slow. However, deepening concerns for the crop in Argentina due to another week of dryness in the forecast along with strength in the soybean complex may help the market move beyond the psychological resistance into next week. Producer selling in the US has been slow but so has export demand as Black Sea origin feedwheat continues to pull demand away from US corn. Funds were noted buyers of near 2,000 contracts on Wednesday. Corn has also been under pressure from the sharp drop in energy prices and the weak tone for ethanol. Prices moved higher on the session Wednesday. Traders said support came from generally firmer action in commodity and financial markets while a sharply lower crude oil market limited advances. Cash markets remained very quiet across the Corn Belt and this has been seen as a limiting force on the breaks as farmers hold tight to inventory. The main news of the day on Wednesday was China’s confirmation that it will indeed buy an additional 20.0 million tonnes of domestic corn in order to support prices. Weekly export sales could set the demand tone for today but talk of stressful conditions in Argentina should help support.
CASH NEWS AND TENDERS: Basis levels were steady at the Gulf Wednesday for corn and higher along the Illinois River. Cold weather has reduced the flow of traffic along the Illinois River.
WEATHER: Brazil received some rains in the past few days but there is a lack of rain in the forecast and hotter temperatures for the next 5 days which could stress the crop. Argentina has been drier and there is little in the way of significant rain in the forecast for the next week. This could add to the stressful conditions for the crop.
TODAY’S GUIDANCE: The demand outlook is still in question but a poor crop developing in Argentina on lower planted area and strength in the other grains looks to support. Short-covering is also a short-term supportive factor. Support is at 392 1/4 and 389 for March corn with 413 1/4 as next swing objective.
