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Buyers to gain confidence-Rich Nelson

06/17/2011 @ 4:08pm

After a week of selling in this corn market, the trade expected some Friday buying to develop. What turned out was some choppy trade where corn started on a positive note, was then pulled down by beans and attempted a strong close. 

There were no big changes in fundamentals after yesterday’s ethanol vote. Many bulls continue to look for a bounce that is well into the double digits, but each day continues to offer a reason for lower trade. Today’s trade doesn’t help to put much faith into a strong bounce in this market. 

Monday is always a new week and as long as the funds stay on the sideline, as they did today, buyers will gain more confidence to put their money in this market. 

On the technical side, July corn still has room for more selling as first support is near 680 with next support 659. Those numbers will be important to watch as both are possible targets for an end to the selling. Today was obviously speculative long liquidation instead of any changes in fundamentals. We can see that because July stayed under pressure all day while December held strong through most of the day. Watching the good to excellent rating on Monday will be crucial for trading the December contract. 

If weather holds well with no major threats, a good yield can still be made on the corn that didn’t get flooded out. Many producers are telling us that except for some drowned out holes, the rest of their fields are off to a great start. Speculators need a major bullish story to convince them of putting money back in this market. Hedgers will want to become more active as long as weather holds steady. As was mentioned before, new crop traders are only focused on yield and until there is a weather problem a bounce is likely but a large scale turnaround might be tough.

Direction: Today was disappointing as many looked for heavy profit taking buying. This market was certainly sold too fast which warrants a bounce but those looking for a move back to 710 in December might be forgetting the improved GTE rating corn has seen since the June 9th report. We still look for a bounce soon and if Monday’s crop ratings are good, those expectations could be lowered…Ryan Ettner

Acres: We thought you would be interested in one of the acreage studies completed this week. Corn rallied 9% from their initial survey in March to when producers were in the middle of planting. In four of the past five years with a big increase in price, acreage increased. This even was seen in each of the past two late planted years (2008, 2009)! Before being adjusted for flooding and late planting expectations, this study would suggest corn acres to increase 1.4 million from the March survey. USDA last week suggested a 1.5 million acre decrease…Rich Nelson

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