Afternoon Corn: Sept Corn was an island of green in a sea of red

<div class=\"default-font-wrapper\" style=\"line-height: 1;font-size: 12pt; font-family: Verdana, Geneva, sans-serif;\"><div style=\"line-height: 1;\"><span style=\"font-size: 12pt; font-family: Verdana, Geneva, sans-serif;\">Afternoon Corn: &nbsp;<br id=\"isPasted\">&nbsp;<br>The day was an oddly mixed one for the corn market. &nbsp;Sept Corn was the only island of green in a sea of grain room red, defying the odds to close 1 &frac34; cents higher. &nbsp;All other corn contracts (ex. deliverable July) settled 1-4 cents lower. &nbsp; Funds remain heavily net short corn to the tune of about 360,000 delta-adjusted contracts. &nbsp;Cash markets were firm, likely stimulating the bull spread outperformance.<br>&nbsp;<br>The day started like one might expect when it&rsquo;s raining in mid-July: &nbsp;lower. &nbsp;The remnants of Hurricane Beryl dropped a few inches of precip on a narrow band of the Eastern Belt (mostly Illinois, Indiana, and Michigan). &nbsp;The rest of the Corn Belt will be mostly dry with just a few insignificant showers on tap over the next week. &nbsp;This set-up suits the flooded upper Midwest just fine for now? &nbsp; 6-10 &amp; 8-14 day maps are non-committal; warm, with &lsquo;near-normal&rsquo; chances for rain. &nbsp;Black Sea crop losses remain the big weather story around the world, but the markets have betrayed little concern on the subject of late?<br>&nbsp;<br>The weekly EIA report arrived near our expectations for ethanol. &nbsp;Ethanol production dipped -0.9% wk/wk; we were expecting a -2% decline. &nbsp; The resulting 1.054 mil bbl/day rate would utilize just under 5.6 billion bushels of corn, which is slightly above the YTD grind average. &nbsp;Blender demand dipped a little (-0.4%), as expected, and ethanol exports were quite strong (182k bbl/day vs. 105k last week). &nbsp;Ethanol stocks were unchanged wk/wk, which was a little surprising given large exports. &nbsp;Ethanol futures ended the day slightly higher, maintaining an estimated 35 c/gal net profit margin for an average Midwest plant.<br>&nbsp;<br>The weekly export sales report returns to its normal time. &nbsp;We are not expecting much magic for corn, particularly given the holiday timing. &nbsp;Combined old/new crop sales will be lucky to sniff 1 million metric tons, in our view? &nbsp;Export news remains very quiet, which is not uncommon for summer days. &nbsp;Brazil is expected to update their thoughts on crop estimates early tomorrow (Thurs) morning; we expect them to raise corn production again. &nbsp;Brazil corn export expectations may be another matter, as that country&rsquo;s ethanol industry consumes a larger portion of the crop?<br>&nbsp;<br>Elsewhere, end-user markets were mixed again. &nbsp;Livestock futures have started the week under meaningful pressure but at least milk managed small gains. &nbsp;Outside markets were in a good mood as the second day of Fed testimony on Capitol Hill raised market odds of a Sept interest rate cut. &nbsp;Weekly USDA reporting found broiler egg sets up +2% on a yr/yr basis with chicks placed up +1%. &nbsp;The USDA&rsquo;s July crop report is due Friday late morning.<br>&nbsp;<br>In the options, volatility was weaker in the Sept position but firmer in the Dec. &nbsp;2,000 Sept $4.60 Calls traded hands early at 1 &frac12; cents. &nbsp;Calendar spreads were quite firm. &nbsp;Corn won the Grain Room Cup, gaining on both soy and wheat. &nbsp; Eyeing the charts,&nbsp;corn is back in search of support after erasing the recent report day lows. &nbsp;We expect minor psychological support in Dec around $4, then life-of-contract lows at $3.95. &nbsp; Futures are still technically oversold with the RSI sitting in the high teens (low 20&rsquo;s for Sept). &nbsp;We continue to expect tough resistance on rallies back to &lsquo;old support&rsquo; below $4.30 CU and $4.40 CZ.&nbsp; In fact, ten cent rallies off any low will likely find some willing sellers in the short-term.<br>&nbsp;<br>KJ&nbsp;</span></div></div>