Afternoon Corn: Futures/spreads bounce modestly after two day correction
<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 bounced back some after a two day correction, finishing the day 2-3 cents higher. Funds may have bought a few odd lots today, leaving them net long close to 90,000 contracts. Cash trade was mixed.<br> <br>After a brief period of calm, outside markets acted up again today, though we doubt if it had much impact on corn trade. We bring this up only because of – what else – tariffs. Japan and the U.S. were said to have a high level meeting today, as the White House seeks its first major deal. Japan is almost always a top three corn customer of the U.S. every year; any results here, favorable or not, could drive price action in the short-term. Stay tuned!<br> <br>The weekly EIA report today was mildly friendly to ethanol but lacked the bullish fireworks many (including us) were expecting. Weekly ethanol production slipped -1% wk/wk; the resulting 1.012 mil bbl/day rate sustained over a marketing year would utilize 5.3 billion bushels of corn. Blender demand rebounded nicely (+3%), despite soft gasoline product supplied (a proxy for demand). Reported ethanol exports relaxed after a strong prior week (137k bbl/day vs. 174k prior). Ethanol stocks featured a small draw of -0.8% to 26.8 million barrels (1.126 billion gallons). Ethanol futures were not impressed; they sold off 2-3 cents today, erasing most of this week’s crush gains. We think an average Midwest plant is doing slightly better than breakeven today, net of all costs.<br> <br>Next on the agenda is the weekly export sales report, due tomorrow morning. We expect a pedestrian week of sales, likely totaling at or just under 1 million metric tons in fresh bookings. Export news was quiet today; there were a couple of small 8 AM flashes Mon/Tues (to Japan and Portugal, respectively). Tender line-ups are quiet, excepting Iran looking for non-U.S. feedstuffs.<br> <br>Elsewhere, outside markets were a little wild today, as noted above. Equity indices were 2-4% lower as we went to press, but the US Dollar was also lower, and Crude Oil was higher. Perhaps a net positive for corn after all??? End-user markets were mixed; livestock quite firm, and milk quite weak. Monthly Cattle on Feed data is due tomorrow afternoon, a little earlier than usual due to Friday’s holiday. Weekly broiler hatchery data found broiler eggs set and chicks placed each fractionally higher on a yr/yr basis. We do not see too much change on the weather front; the U.S. outlook is warm/wet, and Brazil’s 2H April outlook features million dollar rains for many (but not all) areas. Brazil coverage will be critical as the country’s dry season is on the horizon.<br> <br>In the options, volatility was steady to perhaps a touch higher. 1,500 Dec $4.10-3.10 Put Spreads traded at nine cents early morning. Calendar spreads were a little firmer after a couple of very weak days. Inter-market spreads were not much changed. Looking at the charts, recent strength has raised the floor of support under corn; we suspect breaks back to $4.70-75 May will find buyers. Old crop futures have worked off their overbought position with the RSI now in the mid 60’s. Recent highs ($4.90) will function as initial resistance. CZ remains overbought with an RSI still sitting in the mid 70’s after trading to a new six week high today. February highs at $4.80 look imposing for CZ. We see support there at 4.50-55 on a correction.<br> <br>KJ</span></div></div>