Current Marketing Thoughts
By: Kevin Van Trump
Kevin Van Trump has over 20 years of experience in the grain and livestock industry.
Time to Look at New Crop Corn Risk....
Mar 18, 2014
Corn demand here in the US remains strong. Ethanol margins are terrific and US corn export shipments are 40% larger this year vs last. Technically corn is falling under a bit of a darker cloud. I am keeping my eye on the $4.65 level vs. the MAY14 contract. I am thinking if the market eventually closes below this level we could quickly see more large bearish interest form the funds. To make NEW highs we will need to see theMAY14 contract trade back above $5.02^4, which right now seems like a fairly tall task. My hunch is we trade between both the key support at $4.65 and key resistance at $5.02^4 until more is known about the situation in Ukraine, the South American crop, Chinese demand March quarterly stocks, and US planting intentions. Ukraine is currently exporting corn with no glitches or setbacks, but the question remains will this continue? China remains a complete mystery??? In one breath we are hearing Chinese officials say they are buying huge quantities of corn from their own domestic producers because of setbacks in the poultry and pork industries along with a record yielding crop. On the other hand we are hearing the Chinese are buying corn form Ukraine at the same time they are kicking US cargoes. Seems somewhat crazy, but certainly not unthinkable when China is involved. Weather in Brazil will play a huge part in determining the overall yields for second-crop corn, which is now thought to be about 85% planted. Keep in mind the Argentine corn harvest is now about 5% complete and the crop is quickly becoming more competitive on a global scale. I am just worried that US corn demand, though strong right now, might not be able to keep the pace needed too excite the trade. I am also worried that we could see a couple of bearish surprises in the upcoming end-of-month USDA reports. Moral of the story, if you are not comfortable with your current new-crop risk...I would suggest getting to a level you are comfortable with. Keep in mind we are still less than $0.10 cents from the most recent new-crop highs, and at levels we haven't seen since this past October. CLICK HERE for my daily report.