Afternoon Corn: Lower weekly close after Friday sell-off; forecasts in focus Sunday

Afternoon Corn:  Lower weekly close after Friday sell-off; forecasts in focus Sunday

Quiet night session and early AM trade gave way to a modest mid-day sell-off. In the end, corn would finish-out with 17-18 cent losses. Prior to today, the corn market was sporting modest weekly gains, but after today, ended nearly 9 cents lower on the week. Despite the Friday sell-off, the week's range was still one of the smallest seen since late March. CIF Corn continued to be well bid up-front, though the interior trended steady to a little softer.

CFTC Commitment of Traders data this afternoon was close to market expectations. Large non-commercial (aka "fund" or "Large Spec") traders were net buyers of 5,969 corn through Tuesday the 20th. This week's mix was a combination of small new length and even smaller short-covering. Commercial traders and index funds were small net sellers, and small non-reportable traders were net buyers. When including recent activity, we estimate the funds are heading into the weekend net long roughly 135,000 corn futures and options.

Get ready for another weather weekend. Unlike the past several, this one will be more focused on the forward outlook, after a mostly dry week. Today's mid-day model runs found a little more rain, which was a likely catalyst in the noon'ish market sell-off. Overall, warmer temps and infrequent rain during the next week or so are expected to continue to stress crops in the West. For now, such conditions are likely a net benefit to the wetter acres in the East, where sunshine is needed. As the week has progressed, 6-10 & 8-14 day maps have gotten less dry (now 'average' odds of precip east of the Mississippi), but did retain a warmer-than-usual bias for all. Given Friday's selling, there had better be some rain in the forecast Sunday night?

Elsewhere, end-user markets were mostly to the good today. Ethanol was the exception, though net/net, the crush was unch/better. Cattle were the upside leader today, as traders positioned for a bullish Cattle on Feed report today. It appears they got it; 'on feed' was in-line with expected at 99% of year ago, but placements were low at 93% (96% expected), and Marketings were 103% (102% expected). As we discussed yesterday, there are several 'world trouble spots' brewing that will also need to be watched next week. The most recent was torrential rains in Henan and Hubei province in China. Black Sea corn could use more rain; European winter crops less. Brazil still grappling with a historic frost, though most safrinha corn is likely beyond harm at this point (or has already been harmed). Export sales rolls have been extremely quiet in recent weeks, though late week strength in prompt Gulf bids may suggest some interest is building? Outside markets featured a rocky 'risk-off' start to the week but bounced back thereafter. New highs for stocks, Crude Oil back above $70, and the US Dollar only fractionally better on the week.

In the options, volatility continues to melt lower. August options expired on the close; unless exercised, 2,000+ Aug $5.50 Calls will expire worthless. One house sold 900 Sept $5.70 Calls at just under 20 cents average. The strangler was also active (in small size) in Sept options. Calendar spreads were mixed; U/Z bounced, but new crop spreads softened a little. Corn lost ground to both beans and most wheat futures today. On the charts, Dec Corn initial support at $5.50 fell by the wayside today, though we should find much stronger levels below at around $5.20. We still see some resistance at the very top end of the July 4th chart gap at $5.74 CZ, which held the mid-week rally in check. We would expect both Sept and Dec to struggle with $6 psychological resistance on a further rally.