NEAR-TERM MARKET FUNDAMENTALS: The May corn contract made a minor new high for the March rally early in the session yesterday. The corn market then retreated in the face of stepped up farmer selling. Farmers have shown a consistent tendency to sell on rallies to near $4, and this has resulted in a retreat by some basis levels as the futures market has slowly advanced in recent sessions. The Government of Thailand reports that it is selling 450,000 tonnes of corn, half of the amount currently in government stocks. This adds to the list of countries that have either downsized government stocks or removed export restrictions on basic food grains over the past several months. However, China is stepping up its purchases of corn in major producing areas. This is tightening supplies and raising prices which is the government’s stated intention. They wish to do this ahead of planting in order to stimulate as much planted area as possible. While grain stocks are large in China and worldwide, China wants to maintain total grain production at over 500 million tonnes in order to keep their food supply and food prices stable over the long term. The USDA announced a sale of 110,000 tonnes of corn to South Korea this morning. The 7-day strike in Argentina has interrupted sales of grains. Although this action is expected to have the greatest impact on soybean export sales, corn is currently being harvested. Traders are starting to look ahead to the big Planting Intentions Report next Tuesday. Quarterly stocks will also be out that day. This week’s export inspections were 29.9 million bushels versus over 35 million last week. Total inspections to date stand at 52.2% of the projected total compared to a 5-year average of 54.1%. Inspections need to average 34.3 million each week to reach the projection.
CASH NEWS AND TENDERS: Basis levels were lower at the Gulf and in Central Illinois again last week.
WEATHER: Scattered showers and thunderstorms continue in Mato Grosso in Brazil with lesser amounts in Parana. Rio Grande do Sul in the south is still mostly dry. Argentina remains mostly dry. Heavy rains are expected in parts of the Midwest today and tomorrow.
TODAY’S GUIDANCE: The corn market has turned sideways in the area of $4 in the nearby May contract, and with good reason: farmers are still willing sellers at that level and this pressure is enough to overcome the upswing in fund buying. Still, the fact that the market is not retreating in the face of this selling is noteworthy. Given the background support we are seeing from inflationary ideas, the strike in Argentina and possible delays in early fieldwork in the Midwest, we may see a push through yesterday’s high very soon. Support remains at 391 1/2 in the May contract today with the next support at 381 1/2. Resistance is near 412 and at 421.
TODAY’S MARKET IDEAS: We would be a little nervous about buying on a minor dip today, especially if this comes in conjunction with a break in the stock market. However, this may be an excellent day to buy on strength.