Corn bulls are talking about a slightly better new-crop balance sheet here in the U.S., while bears continue to sight record crop production being harvested in South America and the fact it will eventually bring stiffer competition into the global marketplace.
From what I continue to hear, second-crop weather in Brazil is being very cooperative with most areas seeing plenty of rainfall and normal to moderate temperatures. As for weather here in the U.S., at least nearby, there seems to be a window of opportunity being offered up for many producers in the major production states. The extended forecast however looks much more uncertain as several areas are looking at another round of heavy rains.
From a traditional “supply and demand” perspective there is really very little to get excited about. U.S. weekly exports were just reported at their lowest level of the marketing year and South American supply will soon become more readily available in the pipeline. I should also note that Mexico is throwing out talk of buying 3 MMTs to 5 MMTs of corn from Brazil, last year they didn’t buy any from Brazil.
Ethanol demand here in the U.S. appears to remain strong but who knows how ethanol exports are going to play out as Washington starts to negotiate and make more trade adjustments. I still however believe there are some U.S. “weather” uncertainties that will keep the market supported and traders near the edge of their seat.I suspect if the U.S. forecast continues to show complications in the weeks ahead some additional “weather premium” could certainly be justified.
In regard to pricing more new-crop bushels, I’m staying patient. I would like to see the trade test the higher end of the range in DEC17 new-crop up between $3.95 and $4.05 per bushel. The most recent high at $4.04 was posted at the end of February and we haven’t trade back above $3.95 since early-March. I’m hoping we can make a run at it in one of the next two-weeks.
As a spec, I have to imagine a new-crop break to between the $3.60 and $3.70 level will be viewed by many as a nearby buying opportunity.
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