NEAR-TERM MARKET FUNDAMENTALS: Corn started the week under pressure during the overnight session with the July contract finishing that session near its lows. Traders indicate that outside markets and evening up ahead of Wednesday’s USDA reports may be the main features today. Traders are expecting the USDA’s ending stocks number to be near unchanged to slightly lower for 2008/09 corn with next year’s ending stocks down by a more substantial 80 million bushels. Farmer selling is expected to remain light-to-moderate to start the week, and mostly dry weather across most of the Midwest later this week is expected to give a final boost to corn acreage. The Commitments of Traders for the week ending May 2nd showed large net buying by funds. Index funds were net buyers of 14,095, taking their long position to over 290,000. However, this is still well short of the all-time high of just over 450,000 in late April, 2008. Trend-following funds were net buyers of 22,090 to increase their net long position to 126,628 contracts. This is about halfway back to the high net long position of over 250,000 contracts that was seen in early 2008. The week starts with moderate demand on the export front. The Maize Group in Taiwan will tender for 45,000 to 60,000 tonnes of US corn on Wednesday. An Israeli group is tendering to buy 40,000 tonnes of optional origin corn, and Thailand sold 20,000 tonnes of corn to Vietnam and Indonesia. Profit margins for ethanol producers retreated last week due to higher prices for both crude oil and corn. This followed an improvement in profit margins in previous weeks.
CASH NEWS AND TENDERS: The Maize Group in Taiwan will tender for 45,000 to 60,000 tonnes of US corn on Wednesday. An Israeli group is tendering to buy 40,000 tonnes of optional origin corn, and Thailand sold 20,000 tonnes of corn to Vietnam and Indonesia.
WEATHER: The past three days saw showers and thunderstorms across Minnesota, Iowa, Wisconsin and northern Illinois. Amounts were from 1/4 to 1 1/4 inches. Other areas of the corn and soybean belt saw scattered showers to mostly dry conditions. Showers and thunderstorms are expected again in the NW and northern corn and soybean belt today as well as in Missouri with amounts of generally up to 1 inch. This system is expected to migrate mostly south and east over the course of the week bringing scattered showers. However, Friday through Sunday should bring a welcome dry spell to much of the Midwest. Rains are expected in the NE half of North Dakota, slowing planting progress in the NE quadrant of that state where farmers are doing the latest planting of spring wheat. After that, dry weather is expected through the end of the weekend.
TODAY’S GUIDANCE: Corn starts the week on a weak note. A spell of mostly dry weather in the south central and eastern Midwest helped to advance late planting and the dollar is pushing past last week’s highs. Farmers were disciplined sellers last week, resulting in new highs for the year, and the spotlight will be on them again to start this week. Some farmers may increase selling pressure ahead of Wednesday’s Supply/Demand Report. First support is at 436 1/4 in the July contract today with next support at 428 to 429 and then near 421 1/2. Resistance is at 445 3/4 and at 450.