Afternoon Corn: Option traders settle for a $4.25 pin
<div class=\"default-font-wrapper\" style=\"line-height: 1;font-size: 12pt; font-family: Verdana, Geneva, sans-serif;\"><null>Afternoon Corn: Option traders settle for a $4.25 pin<br></null><null><br></null><div style=\"line-height: 1;\"><span style=\"font-size: 12pt; font-family: Verdana, Geneva, sans-serif;\">Friday was another mixed day in the corn market, which was a distinct theme to trade this week. Futures finished fractionally lower despite firming modestly overnight. For the week, corn was still able to close 1 ½ cents higher. Cash remains firm on the interior, while the Gulf has been a little more mixed (steady today).<br id=\"isPasted\"> <br>Corn’s week could best be summed up as, “Black Sea war premium” versus “crickets on exports”. A modest escalation on the Russia-Ukraine battlefield at times put a bid under the grains. The sudden flurry of export business that excited the trade earlier this month has gradually ebbed to the point where there has not been an 8 AM flash sale for corn since last Wednesday (11/13). That is not to say corn demand is not humming – the weekly EIA report pegged ethanol production at record high levels – but the export news silence this week deprived the bull of fodder needed to build on the war jitters.<br> <br>CFTC Commitment of Traders report for once played out near expectations. For the week ended 11/19 (Tues), Managed Money funds were net buyers of 4,638 corn contracts. When including recent activity, we think funds are heading into the weekend net long about 110,000 delta-adjusted corn. Commercial activity was very restrained in the report, which fits with the narrative of a harvest that is at/near conclusion.<br> <br>End-user markets had a mixed week; both hogs and cattle closed higher Friday and posted nice gains for the week. Milk and ethanol struggled Friday and also lost ground for the week. Dairy producer margins remain in decent shape despite an ugly start to fall, but we think ethanol margins are angling back toward breakeven after briefly turning positive again last week. Cattle on Feed report after the close was in-line with expectations; ‘on feed’ at 100% of year ago, and marketings and placements both 105%. A separate USDA report found October egg production down 4% yr/yr, which may explain why eggs are $4/dozen at the grocery store. The industry is clearly trying to rebuild flocks, though, with egg-type chicks hatched up 7% yr/yr and broilers up 3%?<br> <br>Elsewhere, the big macro had a good end to the week, namely a nice Friday rally in both stocks and crude. Unfortunately, the dollar also continued to ride the rally train, ending the week at new two year highs. Weather is still not offering much of a story. The South American outlook still appears net favorable, and the northern hemisphere harvest is either done or close to it. Europe is catching up after a slow start to their corn harvest (France 82% harvested vs. 97% last year). </span></div><br><span style=\"font-size: 12pt; font-family: Verdana, Geneva, sans-serif;\">In the options, volatility was lower heading into the weekend. December options expired with a $4.25 pin. Calendar spreads were a little easier but remain not far from recent highs. Corn lost to the beans but (mostly) gained on the wheat. Eyeing the charts, corn futures continue to find meaningful resistance at $4.35 CZ ($4.50 CH). Initial support in the $4.20 area basis CZ ($4.30 CH) also held recently and this remains operative, so that appears to be our short-term range. Momentum indicators are trying to turn lower on the daily but remain positive on the weekly. The RSI is near-neutral, sitting around the 50 level.</span><br><br><span style=\"font-size: 12pt; font-family: Verdana, Geneva, sans-serif;\">KJ</span></div>