The corn market gapped higher in the overnight session and pressed higher during Tuesday’s session. We saw the July contract close at 368^6, just off the highs of the day as it was unable to break through resistance at 371^0. This week started by posting new contract lows off the previous week’s headlines that U.S./China trade talks fell apart and Friday’s bearish USDA supply and demand report. However, the market rebounded off those lows on Monday and ended up closing positive on the day with some short covering accelerating the move. The most recent crop progress report showed corn planting at 30% complete vs an estimate range of 29% to 41% and vs a 10-year average of 66% complete. Illinois, one of the top corn producing states, only showed 11% complete.
It is starting to look as if the market is pricing in some weather premium that looks to continue with cooler and wetter weather forecasted across the Midwest in the next 10-14 days. South American production is in line with expectations and China reported plans of selling 4 million tonnes of corn reserves to domestic users. If the market can push through current resistance at 371^0 the next upside targets would be 380^4 and 390^0. Although the short-term trend is to the upside after this reversal, it doesn’t take farmers long to catch up if they can get a few good days of weather and can get out to get some seed in the ground. There is also still a lot of unknowns with final acreage numbers and weather throughout the growing season still largely up in the air. Look for the trend higher to continue as funds cover the large net short position and weather keeps planting delayed.
Corn Jul ’19 Daily Chart
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