Afternoon Corn: Overbought Correction, Day Two
<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;\">Corn futures stuck to the prior day’s playbook; old crop further corrected its prior overbought stance, finishing 3-4 cents lower, while new crop was stable (gaining 1-2 cents). We think funds are net long roughly 90,000 delta-adjusted corn. Cash trade continued to ease after the latest round of farm selling tamped down values.<br id=\"isPasted\"> <br>Like yesterday, there were not many market-moving headlines around. Weather is likely helping the market ease back a little, as model runs suggest a wet end to April for much of Brazil. Such rains would help top-up soil moisture reserves ahead of the dryer season. Back at home, the 6-10 & 8-14 day maps lean warm/wet, which should help planters roll in the west, but the inundated east and south could struggle to make much progress? Ukraine leans cold and wet in the short-term, which will inhibit spring planting for a spell.<br> <br>The report-du-jour tomorrow will be the weekly EIA. We suspect seasonal maintenance will continue to take its toll on production, likely declining another ~2% wk/wk. Blender demand should bounce back, but exports will likely not repeat the prior week’s strong showing. We still think ethanol stocks should draw down, and likely by a healthy amount; call it down 2-3% wk/wk. Ethanol futures have ‘hung in there’ this week amid the old crop corn correction, which we think has improved spot industry margins to roughly 5 c/gal profitable, including all costs. <br><br>Elsewhere, outside markets have been much calmer this week. Today, equities and oil were flat and the dollar rebounded. Markets shrugged off rumors China would scrap purchases of Boeing jets in retaliation for Trumpian tariffs? End user markets were steady/firm. There was another 8 AM sale for corn today, making it two days in a row following a long drought; 110,000 metric tons of corn booked to Portugal. Note that we have a three day weekend coming up; markets will be closed Friday. Monthly Cattle on Feed is due Thursday afternoon.<br> <br>In the options, volatility continued to relax as the market corrects lower. 2,000 July-Sept CSO 30 cent Calls traded at 13 ½ cents mid-session. Calendar spreads corrected lower for a third day; July-Dec is now a dime below Friday’s high? Corn was even on the beans but (mostly) gained on the wheat. Looking at the charts, recent strength has raised the floor of support under corn; we suspect breaks back to $4.70-75 will find buyers. Old crop futures have worked off their overbought position with the RSI now in the low 60’s. CZ remains mildly overbought with an RSI still sitting in the mid 70’s. We see support there at 4.50-55 on a correction.</span></div><br><span style=\"font-size: 12pt; font-family: Verdana, Geneva, sans-serif;\">KJ</span></div>