After a promising start to the week in corn, that market ended the week on a sour note. Corn values slipped $.08-$.12 lower following a late-week collapse to prices that saw March corn trade nearly $.15 from its high on Thursday. Much of the blame for the weakness has been tied to the bipartisan senate proposal announced on Thursday to eliminate the corn ethanol mandate, a proposal that was called "monumentally stupid" by the president and CEO of the Renewable Fuels Association. Few in the trade feel that this legislation has any chance of passing, let alone being signed by the President, yet the psychological impact pressured prices on Thursday and Friday.
The corn market had its problems before the ethanol mandate announcement, however. On Wednesday, the Department of Energy announced the largest weekly ethanol figure in nearly two years. In addition, weekly export figures for corn were above expectations on Thursday, yet the market failed to gather enough momentum to take out its 50-day moving average. A technical sell-off began before the proposed legislation was announced.
Finally, growing concerns that China will be absent from the U.S. corn market for the foreseeable future due to their rejection of shipments containing the unapproved GMO trait MIR 162, also weighed on prices. Volume will likely continue to dry up as we approach year-end. This can make for more erratic price action similar to what we saw this week. Rallies in the corn will still likely occur at times between now and the Jan. 10 USDA report, but they may be quick and not long lasting. Producers that are looking to price inventory over the next few weeks should look to have resting orders in place to take advantage of any acute rallies that the corn market may provide.
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