Afternoon Corn: Overbought corn corrects, finishes lower for the week
<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>After a two week nearly-uninterrupted rally, a negative day of reckoning was understandable. And Friday delivered it; old crop futures ended the day 8-9 cents lower, while later-dated new crop positions settled 5-6 cents lower. For the short week, corn finished three cents lower. Funds likely took some profits, leaving them net long roughly 170,000 delta-adjusted contracts. The weekly CFTC update has been pushed to Monday. Cash trade was mixed today, but for the week was easier on an uptick in farm selling.<br> <br>The weekly export sales report took a little breather, no doubt influenced some by Christmas timings (w/e 12/26). New corn sales of 777,000 metric tons (mt) were 44% below the four week average. Usual suspects Mexico, Japan, and Colombia, were top buyers, and a cargo of ‘unknown’ corn was switched to South Korea. Corn sold/shipped for the year moves to 38.8 million metric tons (mmt), which is comfortably ahead of last year’s 29.8 mmt. There were no 8 AM sales reported today, and corn export news has been broadly absent this week.<br> <br>We did not observe much change in the weather outlook, relative to yesterday, but we suspect the market will remain sensitive to changes in Argentina (bullish or bearish). Broad net drying in growing areas is still expected over the next ten days. Exchanges in the country peg corn planting in Argentina at 87% complete. Brazil remains in better shape overall, though the first corn crop is usually the smaller of two.<br> <br>Elsewhere, end-user markets were mostly a little easier today. For the week, hogs were lower, cattle were higher, and ethanol/milk scratched out small gains. We think spot ethanol margins have improved to breakeven levels versus small losses in late December. Weekly and monthly gov’t reporting suggests the corn ethanol grind continues to exceed USDA forecasts? The big macro finally found its holiday spirit, with equities seeing strong gains today and energy posting decent gains for the week. The US Dollar eased back today but was higher for the week, and overall remains near multi-year highs. U.S. conditions are expected to get more wintry the coming week with ice, cold, and snow.<br> <br>In the options, volatility was little changed today despite the larger daily price range. Mid-morning, over 1,600 March $4.60 Calls traded at just under 7 cents. Early morning, 1,500 March $4.40-4.80 strangles traded at 8 ¾. Calendar spreads were weaker between marketing years. Corn gained a little on the beans (2-to-1) and a lot on the wheat. Technically, tentative March Corn resistance at $4.60 held, and the market is now seeing an overbought correction. We still expect support to surface in the $4.45-4.50 vicinity, at least for a moment. $4.35 would be the next level of support and it is a critical level for bulls to defend to maintain market leadership in our view. The RSI is no longer overbought after today (mid 50’s).<br> <br>KJ </span></div></div>