Afternoon Corn: A strong close to an impressive week
<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: <br id=\"isPasted\"> <br>Corn futures closed out an impressive week in fine fashion. The market was green all day, finishing near the highs, 7-10 cents higher across the curve. For the week, corn settled thirty cents higher, the best single week of gains since July of last year. Cash trade set back a touch as the rally finally stimulated some farm movement.<br> <br>The week was eventful to say the least, though the truly consequential moves likely occurred in the financial markets. Most pertinent for corn was the US Dollar, which finished the week nearly 3% lower, and on the intraday lows touched levels not seen in three years. In brief, the weakness in the dollar is tied both to a greater probability of Federal Reserve interest rate cuts, as well as suspected foreign liquidation of US assets amid trade/tariff tussles. April’s monthly USDA report did not contain any game-changing revelations but also did not hurt the corn narrative. The report maintained a relatively snug domestic and world corn balance sheet view.<br> <br>CFTC Commitment of Traders data after the close showed Managed Money traders stood pat on corn futures through Tuesday at least. For the week ended 4/8, Managed Money were net sellers of 3,180 corn contracts, paring their total length back to just 53,576 lots. Commercial and small non-reportable traders were the main buyers for the week. We strongly suspect funds may have wanted to regain some exposure to corn once the market made it through the initial tariff gauntlet without a major shakeout? We feel net buying Wed-Fri may have taken fund length back up to nearly 100,000 contracts?<br> <br>Weather may have also been a mildly bullish input today, as Brazil prepares for the end of their monsoon (rainy) season. Safrinha corn is generally viewed in favorable condition, but the crop is entering a key period of development with soil moisture reserves that can best be described as ‘adequate’. Today’s model runs were a little dryer for Brazil looking out ten days. Until the next update? U.S. spring planting is underway and aside from lingering dryness in the West, appears like it is getting off to a good start. French corn was seen 15% planted.<br> <br>Elsewhere, outside markets were again volatile today but resolved in positive fashion; stocks gained 1-2%, crude finished over $1/bbl higher (and $6 above the week’s low), and gold posted new record highs. End-user markets were mostly firm today, excluding milk. Ethanol closed slightly higher for the day and week, but the crush lost ground this week, narrowing profit margins in that industry to “slightly better than breakeven”, including all costs. Overnight, China raised its own tariffs on the U.S. to 125% versus 84% prior, responding to the U.S.’s most recent hike. The Chinese further said they would not match any further increases as current levels are a ‘joke’. Tariff rates over 100% on both sides are a near de facto embargo of trade? Note China has not purchased meaningful quantities of U.S. corn in over one year, which is why we think funds may be taking refuge here.<br> <br>In the options, volatility held roughly steady heading into the weekend. Upside May Calls were popular late; over 3,000 of the $5 strike traded at 3 cents and the $5.05 fetched 1 ¾ cent. Two weeks left until expiration for May? Calendar spreads corrected after a very firm week. Corn continues to hold about steady on the beans (2-to-1) but lost to the wheat as that spread rebounds off new lows. Looking at the charts, this week’s rally is raising the floor of support under corn; we suspect breaks back to $4.70 will find buyers. Old crop futures are getting overbought (RSI nearly 80), and futures closed right into a two-thirds fib of the Feb break. The rally is due a breather? CZ trade also resolved favorably, snapping the brief March down-trend today with some gusto. Here too, CZ is getting moderately overbought. We think CZ support moves up to $4.50. <br> <br>KJ</span></div></div>