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Price action: July corn fell 4 3/4 cents to $6.07 3/4, a mid-range close, while December futures fell 2 cents to $5.49 1/4.
Fundamental analysis: Corn futures recovered from overnight weakness early in the session but began handing back gains around mid-morning despite support from a weaker U.S. dollar. Traders positioned ahead of the Fed’s interest rate decision, which was reported at 1 p.m. C.T., as futures attempted to inch higher following the Fed’s decision to keep rates unchanged. The decision marks the first pause in the central bank’s string of 10 straight increases over the past 15 months. However, the Fed signaled interest rates will likely rise by another half of a percentage point by the end of the year due to a stronger-than-expected economy and slower decline in inflation.
Weather continues to be a market driver as several key growing areas throughout the Corn Belt progress through the growing season with less-than-adequate moisture levels. World Weather Inc. indicates north-central Iowa and eastern Minnesota to Michigan will miss much of Saturday through Monday’s rain and crop stress is likely to increase during the next ten days, but with at least some soil moisture in place and a lack of heat over the period should dampen crop stress. The forecaster notes the net drying expected during the next two weeks will leave a large part of the Midwest at a critical level of dryness and if timely rain returns in the last days of June or first of July, production potentials could be high, but if rain does not increase, yield potentials will likely quickly decline.
U.S. ethanol output fell by 18,000 barrels per day (bpd) to 1.018 million bpd in the week ending June 9, while stocks rose 700,000 barrels to 22.9 million barrels on the week.
USDA will report its weekly export sales data for week ended June 8 ahead of the open tomorrow. Traders are expecting old-crop sales to range from (100,000) to 550,000 MT, with new crop sales expected between 0 and 350,000 MT. Last week, USDA reported net old-crop sales of 172,709 MT and new-crop net reductions of (106,783) MT.
Technical analysis: July corn futures gapped lower in the overnight session, falling below support at $6.07 1/4, though this morning’s open saw adequate upward momentum to fill the overnight gap. However, the strength was short-lived, with a close held just above this morning’s tested support level. A continued test of the area will likely find bears then targeting $6.01 3/4 and the 40- and 20-day moving averages of $5.95 3/4 and $5.90 1/4, respectively. From there, little support lies until the May 18 low of $5.47. In the event bulls are able gather strength to work higher, resistance will continue to stand at the 100-day moving average of $6.21 1/4, with a breach of the technically significant area likely increasing buying impetus, though additional resistance will stand at $6.30 1/4, again at $6.35 1/2 and the May 18 high of $6.47 1/2.
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