Afternoon Corn: Nice intraday reversal higher for Dec Corn

Afternoon Corn:  Nice intraday reversal higher for Dec Corn

The corn market got the week started off right, though it sure looked bleak early. Futures were a little weaker heading into the morning pause, but they found buyers during the day, no doubt with a helpful assist from the wheat market. Corn would finish the day 14 cents higher. Managed Money traders likely bought a few bushels; we think they are net long roughly 155,000 corn futures and options. Cash trade was very mixed; the Gulf was steady, but interior markets were somewhat volatile without any real defining feature (some higher, some lower).

Weather influences remain mixed. Early weekend rains favored portions of SE SD, E NE, S IA, and N MO. The forward outlook appears favorable; warm and wetter, effectively, though the Dakotas still have the lowest precip odds of the bunch. To get there, though, it's going to be a relatively dry week (albeit not quite as hot as those seen recently). Does start getting a little hotter closer to the weekend? Crop Progress data after the close was close to trade expectations for corn. National Good-Excellent ratings fell -2% wk/wk to 62%, while Poor-Very Poor up-ticked +1% to 11%. This compares unfavorably to 72% G-E and 7% P-VP in 2020. Ratings improvements were confined mostly to the Eastern Belt (IN +3%, OH +4%, TN +2%), while declines were weighted heavily in the West (IA -3% G-E, KS -4%, NE -5%, ND -3%). 91% of the crop is now silking and 38% is in the dough stage, both slightly ahead of average.

The mid-day grain inspections data featured a little excitement for a change. For the week ended 7/29, U.S. exporters shipped 1.384 million metric tons (mmt) of corn, which was noticeably better than the prior week's 1.184 mmt, and nearly double the year ago week's 0.727 mmt. China was the largest recipient, taking 0.564 mmt off the Gulf and 0.276 mmt off the PNW. YTD corn inspections now stand 62.81 mmt versus 38.09 mmt in the corresponding period the prior year. Four-and-one-half weeks left to ship out almost 10 mmt to meet USDA sales forecasts; likely a tall order? 8 AM sales announcements remain quiet, despite plenty of rumors (and a healthy break in the US Dollar).

Elsewhere, end-user markets were mostly to the good to start the week. Notable winners included hogs (up $1+) and ethanol (another up day for 'the crush'). We think most ethanol producers are earning close to 10 c/gal today, versus a small net loss mid-July. The market appears determined to kick wheat back out of feed rations (more so in the U.S. than abroad, at least so far), and there is talk of increased sileage chop. Analysts at AgRural today estimated the Brazil safrinha crop at nearly one-half complete. They trimmed their estimates -3 mmt from July to 51.6 mmt for the second crop alone.

In the options, volatility bounced for a second day. Players bought 500 Dec $6 Calls at 22 cents. Another player paid 2 ½ cents for 4,500 Sept $5 Puts. Calendar spreads were mixed; U/Z fell to new lows, but the new crop months were generally a little better. Corn gained on the beans but lost to the wheat - a familiar trend of late. On the charts, today's trade puts an 'outside day higher' reversal into the mix. Follow-through will be important; recent highs near $5.75 is the first line of resistance. Last week's low just above $5.30 is initial support.

KJ