Afternoon Corn: Fund short in corn rises to highest level in over one year

Afternoon Corn:  Fund short in corn rises to highest level in over one year

Repeating from yesterday, the corn market 'tug of war' continues. This time, the bull struck back, building off an early morning pop to close out the week with solid gains. Most actively-traded futures finished 11-12 cents higher today. This significantly pared back the week's losses; the weekly chart will reflect small 1 ½ cent losses, which in turn was 22 cents above the week's low. Cash trade was steady/mixed Friday.

CFTC Commitment of Traders data after the close was interesting, finding more fund selling in corn than expected. For the week ended 5/24 (Tuesday), large non-commercial traders (aka "funds" or "Large Spec") were net sellers of an eye-opening 46,229 corn contracts. 33,330 was liquidated longs, while 12,899 was new short positions established. Small non-reportable traders and index funds were also sellers, while commercials took the other side of all, buying 62,432 contracts on the week (nearly all of which was short-covering). When including recent activity, we think funds are heading into the weekend net long about 205,000 delta-adjusted contracts, which is about 20,000 less than we would have expected pre-release.

Overall, it was a quiet news day. The long weekend will be a wetter one for the Western Corn Belt, so whatever didn't get done this week will have to wait until June days. There is a real possibility that we have lost some corn acres in the far NW Belt, particularly North Dakota, but it is also possible we gained some back in other spots that had more planting success. Fertilizer availability was a constraint early spring, and it is not clear if those issues were solved for all? June 30th Acreage report will be interesting! Forecasts are drier in the Eastern Belt going forward, which will permit decent fieldwork progress there - but again, it is getting late for ideal corn planting. Note that Monday's Crop Progress report should reflect very strong corn planting progress, but they do not adjust for lost acres.

Elsewhere, end-user markets were mixed Friday. On the week, hogs and ethanol were decent winners, while cattle and dairy were a little better but very close to the flat-line. On the world scene, French corn condition ratings were 91% Good-Excellent, down slightly from 93% last week. Still no real improvement in Mato Grosso (Brazil) dryness and crop stress but most other safrinha areas remain in good shape. Corn export news remains very quiet, with most buyers likely looking more at southern hemisphere suppliers. Outside markets ended the week in a decisively 'risk-on' manner; equities have rebounded nearly 10% off Tuesday's low, Crude Oil ended the week near recent contract highs, and the US Dollar has sold off around 3% from its recent multi-decade high.

In the options, volatility was a little easier heading into the weekend. The big trade of the day was the Dec $9-10 Call Spread, which traded 3,000 times at 10 ¾ cents. Calendar spreads were generally a little firmer. Corn gained back a little ground on the beans today and was mixed versus the wheat. Old crop corn continues to struggle with pushes up near $8, which stands as stiffening resistance. $7.50 support held several times this week. New crop (CZ) broke-down initial support ($7.40) last week, which becomes new resistance for that contract. Recent lows of $7.04 stand as an important level to hold for market bulls, which they have also accomplished this week. Momentum indicators remain tilted lower, and corn is not yet oversold.