Grain Spreads: Corn Firms into WASDE
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Commentary
Corn closed with minor gains supported by strength in beans and short covering. Weekly export inspections once again came in above the highest guess. US export inspections for the prior report turned out 1.5 million metric tons versus 990K a year ago. This brings the US marketing year’s inspections to 63.1 million metric tons vs 49 million for the same period a year ago. US prices are still the cheapest in the world. Today's high temperatures are forecasted to be very mild in the western belt with heat lingering in the east, but temperatures will be on the rise next week across the most of the Midwest. Precipitation is expected to be the greatest this week in the north-central Midwest. Some field and grain storage damage from severe storms in Nebraska was reported over the weekend. The corn market, not being the target of trade with China, has the prospects of a record yield revealed in the Crop Production report tomorrow cap the gains. The average trade guess heading into the report is around 184 bushels per acre, and accompanying production is near 16 billion bushels. The big number for me is ending stocks and how the surge in demand could potentially offset the increase in production year on year. Keep in mind last year, yield was projected near 183, but was revised lower by November down to 179. Hot and dry late can take the top off the crop in beans and corn. Will we see that type of weather event emerge again? Technical levels to watch in December corn show support at 4.03 to 397. A close under and its 3.90 to 3.85. Resistance is 4.12 and then 4.16. Consecutive closes above these areas could prod fund shorts to push the market to 4.30 to 4.35.
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Sean Lusk
Vice President Commercial Hedging Division
Walsh Trading
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