Afternoon Corn: Futures back to pricing-out weather risk
<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 faced a little less drama today. Markets were steady overnight but found bidders through the morning. Futures peaked around noon and featured a little late profit-taking? Corn finished the day 3-6 cents higher. Funds likely added a little more length, plumping their net position up to nearly 360,000 delta-adjusted lots. Cash markets were steady, leaning easier.<br> <br>The day could best be described as, ‘Tariffs to the back, weather to the fore.’ Tariff threats to both Mexico and Canada now appeared to be kicked down the road thirty days. 10% duties went into force for some Chinese goods, and they posted a measured retaliation overnight that did not ruffle many feathers. This should give the markets a beat to price out weather risk. Argentina is due to get a nice upswing in precip the next couple of days, and the market will likely react accordingly depending upon coverage. Overall, we think South American corn production expectations are eroding, but not plunging; a good crop is overall still expected, but will ultimately hinge on Brazil’s safrinha/second crop. The latter has featured some planting delays, but it is still quite early in the season. <br> <br>The report-du-jour tomorrow will be the weekly EIA. We suspect ethanol production will bounce back quickly from a cold weather inspired slowdown. We think output will rise about +5% wk/wk. Demand should also improve, but we think stocks should still build seasonally by around +1% to +2%. Ethanol futures gains have lagged corn so far this week; we estimate an average Midwest plant is close to breakeven today, net of all costs.<br> <br>Elsewhere, other end-user markets were mixed; cattle remained under some probable liquidation pressure after a big move, while both hogs and milk bounced back swiftly with Canadian tariffs pushed out at least thirty days. Outside markets started the day a little wobbly but was full ‘risk on’ into the afternoon; the Dollar slipped -1%, equities were firm, and energy was mostly easier. China’s retaliation centered mostly on U.S. energy products? Export news remains quiet, though at least there was a small 8 AM flash to help motivate the bull (132k U.S. corn to Korea). China returns from Lunar New Year festivities tomorrow?<br> <br>In the options, volatility was steady/weak. Calendar spreads were firm today, but we will note the Goldman Roll starts Friday and funds are likely long a lot of March Corn? Corn was the least pretty house on the block today, losing a little to both wheat and soybeans. Looking at the charts, futures are back ‘up and at them’, testing out resistance. We see a lot of overhead between $5 and $5.05 in CH that can trip up a well-subscribed corn long. The first layer of market support in the $4.70-75 area basis CH was tested yesterday and held, remaining operative. The daily RSI is not yet especially overbought with a reading of 63 (CH)? Dec ’25 should feature some resistance around $4.70-4.75. Support at $4.55 also held Monday and remains operative.<br> <br>KJ </span></div></div>