Content ID

254985

Analyst: USDA’s Feed and Residual Use Numbers Too High

A much lower volume trading day was seen Friday, which resulted in a small technical setback away from 371 resistance. Without fund support or fresh overnight sales demand news, the corn set back slightly on light profit taking and some light new selling near the 370 area of resistance. Friday added in some spill-over resistance from beans as well as a light amount from wheat. For the week as a whole, it was another period of strong demand to help keep support in this market but not enough to cause a breakout higher. We should be well aware now that it will take more than just strong demand to move much past 371 given that we have seen strong demand for the last three weeks and only managed to take out recent highs by 2¢.

Bulls need fund buying assistance if corn is going to see a significant breakout higher ahead of the acreage report. Next week is the February USDA Supply/Demand report where early thoughts are for a slight decline in carryout to result in a slightly bullish report. Some increase in demand could be expected, but we should also keep in mind that USDA is currently using a very high feed and residual use which likely needs to be lowered, even after seeing high placements on recent cattle on feed reports. Next week let’s look for a small pullback that will continue to be well supported ahead of the expected slightly bullish USDA report on Thursday.

Bulls

  • Early thoughts are for a 22-million-bushel decline in carryout on Thursday’s Supply/Demand report.
  • Another strong demand week should continue to offer support on pullbacks in this market.

Bears

  • A lack of fund buying the last two days has allowed for light sellers to move this market lower.
  • If beans continue their grind lower on solid South American weather, it can continue to spill over to corn as well.
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