Afternoon Corn: Futures fought off headwinds to close higher
<div class=\"default-font-wrapper\" style=\"line-height: 1;font-size: 12pt; font-family: Verdana, Geneva, sans-serif;\"><div style=\"line-height: 1;\"><span style=\"font-size: 12pt; font-family: Verdana, Geneva, sans-serif;\">Afternoon Corn: <br id=\"isPasted\"> <br>Corn futures performed well today, shaking off some macro headwinds and new contract lows in wheat. Corn finished the day with 2-3 cent gains; bull spreads were decently bid. Funds are believed net long around 160,000 delta-adjusted contracts with a CFTC update pending tomorrow night. Cash had a mixed to easier tenor.<br> <br>The weekly export sales report arrived in good stead for corn, toward the high end of trade expectations. Net sales of 1,174,600 MT for 2024/2025 were up 24% from the previous week, but down 10% from the prior 4-week average as we work off that long tail. Usual suspects Mexico, Japan, and Colombia, purchased the lion’s share, along with interesting cameos from Taiwan and Spain. Corn sold/shipped for the year to date stand 36.3 million metric tons (mmt), up from 28.2 mmt last year. There was a little more export news beyond the report; South Korea was busy, with NOFI buying two cargos and MFG at least one, all optional origin. It may not be a coincidence that importer demand is surfacing given the 15 cent correction following last week’s WASDE.<br> <br>There has been an unusual amount of macro drama over the past couple of days. Yesterday’s ‘hawkish rate cut’ from the Fed gets the credit in the media for the tumult, but we think the disquiet might be tied more to the possibility of a gov’t shutdown? Whatever the reason, the end result has been a soaring dollar (two year highs), shaky equities (just off record highs in many indices), and mixed energy markets. Note that the nixing of the previously mooted spending deal likely puts in jeopardy the ‘year round E-15’ measure under consideration. Disappointing for sure, especially long-term, but in the short run, we do not see much impact from year-round E-15, especially with winter looming. To wit, ethanol futures performed well today, gaining a little ground on corn. We think an average Midwest ethanol plant is currently breaking even or losing a little money, net of all costs.<br> <br>Elsewhere, other end-user markets felt some pressure today. Milk sold off in front of today’s production report? They bounced back after its release? November U.S. milk production was running -1% lower yr/yr, mostly due to lower per cow productivity – perhaps with an eye toward bird flu? Herd size was larger yr/yr, but lower sequentially relative to October. Yesterday’s weekly broiler hatchery report found U.S. broiler egg sets and chicks placed both 3% higher on a yr/yr basis. The next couple of days will also be busy; Cattle on Feed is due Friday and Quarterly Hogs and Pigs Monday. South American weather appears to be diverging a little with Brazil expected to be decently watered while Argentina dries out. Argentina is not expected to be concurrently hot, which should preserve recently topped-up soil moisture in many areas?<br> <br>In the options, volatility softened a little after yesterday’s pop. Early, 1,000 March $4.20 Puts traded at 4 3/8’s; 1,000 of the May $5.50 Calls traded at 1 ½ cents. Calendar spreads were firm today; H/K ended just shy of recent highs. Corn lost to the beans but gained on the wheat (which appeared to take the brunt of the dollar strength). Eyeing the charts, post-report trade confirmed meaningful resistance at $4.50 in March Corn. We see support for March Corn as a shelf starting here and extending down to $4.30. Corn has worked off its overbought condition with the RSI back in a neutral posture around 50. The weekly chart is still in a positive mode.<br> <br>KJ </span></div></div>