Afternoon Corn: Quietly mixed day with CN23 bull spreads performing

Afternoon Corn:  Quietly mixed day with CN23 bull spreads performing

The corn market held mixed feature today, though in the end, it was the bull spreads that came out on top. July Corn (and Bean Oil) were the only splotch of green on the board; CN finished 3 ½ cents higher, while new crop corn positions ended either side of four cents lower. Funds were estimated small net sellers of the day; we believe they are heading into tomorrow's CFTC true-up with a net short just under 100,000 lots (via the disaggregated report). Cash trade was steady on the interior, while Gulf bids continued their recent rebound.

The report-du-jour is the weekly export sales, and to little surprise it was unimpressive (to be kind) for the grains. Old crop corn featured net cancellations of -75,200, while new crop chipped in a positive +52,100 metric tons, leaving net sales very close to flat for the week. The story of course is the China and 'unknown' cancellations in old crop (331,600 and 216,700, respectively), offset by small traditional buyers such as Japan and Mexico. Old crop sold and shipped moves to 38 million metric tons (mmt) versus 59 mmt last year. New crop corn commitments stand 2.75 mmt, which is one-half the level seen this time last year (and a whopping 9 mmt on the books in 2021).

Tomorrow is "position day" in front of a three day weekend. U.S. weather remains favorable for aggressive fieldwork, though those exact same benefits will keep traders watching the forward outlook for rain. Non-U.S. weather remains mostly non-threatening; analysts are starting to raise their outlook for Brazil's safrinha (second) crop. Argentina's drought-impacted harvest was estimated 27% complete.

Elsewhere, outside markets remained net jittery as the debt ceiling debate drags on, though one notable exception was tech stocks, which benefitted from a huge earnings beat from AI-beneficiary NVIDIA. The US Dollar was firm and oil was very weak (Russia undercut Saudi comments hinting at potential OPEC oil cuts?). This also appeared to weigh some on end-user markets, where hogs traded to new contract lows and milk was slightly weaker, though cattle did at least manage a small bounce. Ethanol ended the day around steady, maintaining good spot profitability (~40-45 c/gal). There were no 8 AM sales flashes.

In the options, volatility was steady-leaning-better with an eye toward the long weekend. June options expire tomorrow on the close. Calendar spreads were firm in July '23 positions, but a little softer elsewhere. Corn gained on the beans but (mostly) lost to the wheat. On the charts, $6 continues to represent meaningful overhead resistance for July Corn. Thursday's low of $5.47 will stand as new initial support, though at this point we would suspect a break to $5.70 would bring some buyers. CZ affirmed support around the $5 level. The past couple of days, CZ has found limited resistance at $5.25. More significant levels loom ahead at $5.40-45. The RSI is in a neutral posture, while momentum indicators are turning higher, particularly in July.