Watch early week buying
Corn: Today saw much less volume than we had seen in corn recently. Talk of vomitoxin was much more limited today as is typical for a rumor rather than anything backed up by facts.
This market had lower crude oil trade to help keep it down yesterday as well as today. Above 400 catches our attention to putting on additional or new hedges for next year and prices at 350 has been talked about as next potential support. There was not significant enough news to run corn to either level, leaving us with only Wednesday as a hedging day. Rumors may guide the market for a day but those are often forgotten within 24 hours as was the case with the vomitoxin story. There have been many that were looking for disease in the corn, given conditions this year. If you get enough people looking for something, it will eventually be found one way or another. It was evident that outside influences were unable to guide corn either way today. When beans suggested a higher move corn was unwilling to follow along and when crude traded over a dollar lower it also failed to pull corn lower. Why will this corn market not move? One good possibility is that the last two weeks corn has seen major buying for the first two and a half days of the week. Does that mean traders should buy and hope it shows up for a third week in a row? Do sellers sit still to end the week afraid of that buying? There are good reasons to hold off on a Friday. Charts do not give us definite direction today and everyone will be anticipating activity on Monday. If buying shows up then we have working orders to hedge. If buying isnâ€™t found next week then we look to buy back cash sales with options. There was an interesting fact worth looking at when it comes to South Korea buying corn. They recently bought 165,000 tonnes of optional origin corn and China is one of those options.
Direction: Stuck between recent highs for the sideways move and recent support the market will get direction on Monday, especially if the recent large early week buying shows up. If this buying shows up, expect another shot higher and a chance to get hedges on. If not then expect crude oil to pull on corn as the trend for that market is choppy but lower. We will expect crude to the leader of corn but canâ€™t ignore large money buying if it does show up againâ€¦Ryan Ettner
Crude-Unleaded Gas-Ethanol-Corn: One thing we have been harping on in the past few weeks has been the need for us to look at energies (crude) just as much, if not moreso, than grain fundamentals. The portion of corn that goes into ethanol receives â€œextra valueâ€ that corn for exports or feed does not have. This â€œextra valueâ€ fluctuates with energy prices. Today, we were watching crude oil closely. It posted the lowest close itâ€™s made in a full month and yet corn certainly did not. What happened? We must keep in mind there are two separate steps between this crude and corn relationship. Unleaded gas, via RBOB, closed to one month lows. However, ethanol prices did not. Ethanol not only closed over unleaded gas (RBOB) but actually closed at the highest level it has been at since October 1, 2008. Letâ€™s watch this ETHANOL price issue closelyâ€¦Rich Nelson