Corn will need help from spring weather in order to bounce | RJO FuturesPosted 02/27/2017 10:20AM CT |
The weather remains mostly favorable for South American crops, and Chinese imports of DDG and ethanol were very small in January due to a jump in import taxes. May corn closed a bit lower on Friday and managed to experience a loss of 9.25 cents for the week. There seems to be a little more rain than needed in Brazil, and the 2nd crop plantings pace has fallen behind normal. Expectations for cheaper supplies from Brazil and Argentina could sour US exports soon. A private Brazilian consultancy group has estimated the Brazilian corn crop at 93 million tonnes vs. the USDA’s estimate of 86.5 million. They also put Brazil’s corn exports at 28 million tonnes, up from 14 million tonnes last year. While corn usage for ethanol demand is projected to be up by 50 million bushels from 2016/2017 to a record high, feed usage is down 150 million bushels and exports are down 325 million bushels. This leaves the forecast for ending stocks at 2.215 billion bushels, a burdensome level. We suggest position traders wait to establish and type of bullish strategies when December corn pulls back to the key support zone of 381-375. The short-term trend looks to be pointing down, though. Support in May comes in at 3664.