The corn market surged back higher Friday erasing most of the week’s losses. The corn market traded lower for six consecutive trading sessions before catching a bid on Friday morning.
The slide in the corn market was caused by continued poor export demand for U.S. corn. Exports this week were just 10 million bushels, which leaves the year-to-date commitments down 47% from a year ago versus the USDA estimate of down 26% from a year earlier.
For weeks, the market has heard that South American corn supplies are on decline and that soon global trade for corn would have to shift to the U.S. The weakness to corn values was aided by a sharp selloff in the wheat market on Tuesday following a surprising jump to the estimates of U.S. and global supplies to wheat. Slack corn demand and weakness to the wheat market was joined by fund selling tied to a continued stalemate in Washington that helped to create an over $.50 slide to March corn from its November high.
March corn has found support near it November lows, an area that likely will define the bottom of the trading range leading up to the January 11th Production Report. The top of that near-term trading range is likely to be near $7.65, which would is defined by the 100-day moving average as well as the late November highs.
The next critical level of resistance that corn will face in the near term is near $7.45 basis March corn as a series of moving averages, including the 50-day, converge. We would look for that area to be tested in the next week or so, and any price strength above $7.50 to be tied to an increase in demand or those positioning for a bullish January Production Report.
We have largely moved to the sidelines on corn hedges this week and will use price strength between $7.45 and $7.85 to re-establish hedge protection. On a day like today, the grain markets are very insignificant. My thoughts and prayers are with all those affected by the tragedy in Newtown, Conn.