Afternoon Corn: Turnaround Tuesday ran out of steam for new crop late

Afternoon Corn:  Turnaround Tuesday ran out of steam for new crop late

"Turnaround Tuesday" for the grains. July maintained its pole position, finishing-out with an impressive fifteen cent gain. New crop Dec added six cents, while Sept ended-up in-between (8 ½ cent higher). Funds were estimated net buyers of 10,000 corn today, which would leave them net long roughly 160,000 delta-adjusted futures. Cash trade was headlined by modest losses for July Gulf slots, while interior bidders were busy switching their bids to Sept.

Today was a 'green' start for most commodities, as China mostly had good things to say on their Covid-19 front. The early bid waned for some markets (metals and the stock market), while others did a better job hanging-in there (soybeans and crude oil). Corn ended-up somewhere in-between, finishing decisively higher but well off the day's high (July excepted). Declining crop ratings from Monday's report also helped maintain the grain/soy market's altitude(s) intraday.

As of this writing, the EIA is expected to release two weeks' worth of petroleum/ethanol report data tomorrow (Wed) at the usual time. Overall, we think ethanol production will likely glide lower, falling another -1% this week (after a projected 2% decline the prior week). We point to softening profitability and concerns over future feedstock availability. Demand should improve seasonally, which should swing ethanol stocks to roughly unchanged (versus a projected small build the prior week). Ethanol struggled today, falling despite a firm corn board. We think ethanol production margins are still a little positive, but we are talking just a few cents when including all costs.

Elsewhere, end-user markets were mixed - livestock lower, milk a little better (after selling off for about one week). 6-10 & 8-14 day maps retain a warm and wet bias for most of the Midwest. 7 day precip maps suggests there will be showers around just about everywhere, but accumulations may be less than ideal (one-half inch or less for most over the week). Rain the week after next needs to deliver a better showing? Topsoil moisture has been diminished in many areas across the U.S. Midwest, but subsoil moisture is favorable? Tomorrow is "Position Day" for July delivery, which will likely occupy much of the market's attention. The other half will likely be occupied by June 30th's important duo of reports, Acreage and Quarterly Stocks.

In the options, volatility was materially (1-2%) lower in Aug/Sept, but other positions held up better (down 1% or less). Calendar spreads were firm, particularly in the July '22 which closed into new recent highs relative to most other months. Corn lost ground to both the beans and the wheat today. Technically, Dec Corn breached major support last week at $6.80, which becomes a problem on rallies going forward. The next major support level to watch is the support shelf from March near $6.30. Dec Corn still leans a little oversold with the RSI just over 30.