Afternoon Corn: Bounce day after an ugly week for CZ

Afternoon Corn:  Bounce day after an ugly week for CZ

After a three day drubbing, it probably shouldn't have been too surprising that the market was able to stem a "Feel-Good" Friday bounce. New crop blazed the trail higher today, gaining back 16-18 cents. July lagged behind with just 3 ½ cent gains, though trade here was perhaps unduly influenced by option expiration. The official weekly chart (based on July settle) will record losses of 34 cents; the Dec contract itself lost 57 cents over four days. Cash trade was steady/firm on the interior and mixed at the Gulf.

CFTC Supplemental Commitment of Traders data after the close found slightly less fund selling in corn than we were expecting. For the week ended 6/21, large non-commercial traders (aka "large spec" or "funds") were net sellers of 13,783 corn contracts. This included 18,613 liquidated longs and 4,830 covered shorts. Commercials were the only class that was a sizable net buyer on the week; index (or long-only) traders were net sellers of 11,348, and small non-reportable traders also sold 3,342 corn. When including recent activity, we think funds are heading into the weekend net long roughly 165,000 delta-adjusted corn.

The focus of the markets Sunday night will likely be weather, and if the current optimism over a cooler/wetter change ultimately bears any fruit. Heading home Friday, the 6-10 & 8-14 day maps were promising above-average odds of rain across the Corn Belt, along with 'slightly above average' odds of warm weather. The 7 day qpf continues to suggest decent short-term coverage for the center of the Corn Belt (IA/MN/WI), while the wings see trace amounts at best. Also of interest will be the disposition of outside markets; they ended the week in recovery mode; the Dow gained 1,600 points, Crude ended $2 lower but $6 off the week's low, and the US Dollar edged a little lower. GDP and inflation prints will be of interest next week?

This morning's weekly export sales report was decent for once; old crop sales were 671,900 metric tons (mostly to Mexico) and new crop sales were 358,400 metric tons (mostly to Latin America). Total sold + shipped for the 21/22 marketing year moves to 60.3 million metric tons (mmt), which is now 97% of the USDA's sales goal and compares to 69.5 mmt on the books for the year ago period. U.S. export news flow remains 'crickets', but we think it will be interesting to see if the recent price break will encourage some new crop bookings. As it stands today, there are 6.26 mmt of new crop sales made; last year at this time, there were 15.75 mmt (mostly to China).

Elsewhere, end-user markets nearly all closed lower for the short week. Ethanol margins remain pretty slim; about 5 c/gal profits including all costs. Cattle on Feed data after the close did not stray too far from expectations, finding 'on feed' inventory at 101%. Placements (98% vs. 100% est) and Marketings (102% vs. 103% est) both were a little light. Harvest is ongoing in South America. French corn ratings backtracked slightly off very high levels, going to 84% Good-Excellent versus 87% last week. Look for news wires to publish analyst estimates for the June 30th reports (acres and stocks) over the weekend.

In the options, volatility was mixed heading into the weekend. July options expired with a classic $7.50 ¼ pin. Anyone with long $7.50 Calls will get exercised into them Sunday night unless they say otherwise? Calendar spreads softened after a very firm week. Corn was mixed versus the beans but gained on the wheat. Technically, July Corn has found stiff resistance near $8; support tentatively remains $7.50. $7.20 support looms just below that, which is also an important level on the weekly chart. Dec Corn breached major support at $6.80 yesterday, which will likely become a problem on rallies going forward. The next level to watch is the support shelf from March near $6.30. Dec Corn still leans a little oversold with the RSI at 34.