Why the poor close in corn, after its impressive rally during Wednesday's trade? Typically when a futures market such as wheat futures hits lock limit on the open, investors may find cousins to the wheat to trade. The cousins in this case are corn, oats, soybeans and its products. Thin stocks of global starches are supportive. The trade is anticipating smaller corn stocks when USDA releases its supply demand report Friday morning. Allendale does not anticipate a change to corn use for ethanol but can justify the USDA increasing export potential beyond its present record projection of 2.45 billion bushels.
Technically March corn has immediate technical support at 4920 and resistance at 5544 (1996 record high). December corn futures have technical support is 5150 and resistance of 5544, trend is up. Unless attitudes shift away from the current bullishness, traders will continue to look to be buyers of corn on any breaks. Wednesday posted a key bearish reversal in corn futures that bears watching. If the market were to close lower again on Thursday, we could see more near-term pressure develop. But, if corn could close the day higher, that would negate this chart signal and more strength could lie ahead.
When looking for a Cash peak, odds favor a national cash corn peak during the months of April and May dating all the way back to 2000. Will this year be different?
Allendale remains bullish to corn futures as world and domestic stocks continue to decline despite higher trending futures prices. New investment money is said to flowing into corn futures. For the month of January, corn futures gained 10% in value while crude oil lost nearly 5%. The spotlight remains on tight inventory levels of grains and oilseeds domestically and globally.
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