Corn Prices Stumble Ahead of USDA Report
????? Fundamentals
After an attempt to test the 750.00 price level for May futures was stymied, Corn futures have given up most of last week’s price gains, as many traders have squared positions ahead of this morning’s USDA crop production and supply/demand report.
Here the focus will be on U.S. Corn carry-out totals, with many analysts looking for a moderate increase of between 15 to 20 million bushels. Any increase to the carry-out total is most likely due to lower Corn demand for Ethanol production, as well as lower than anticipated U.S. exports. Last week U.S. Ethanol production rose by 0.5% from the previous week to 774,000 barrels per day, but that is still near the lowest production levels recorded since the government began tracking production in 2010.
Also on many traders’ radars will be the USDA’s estimate for South American Corn production, with current expectations for a cut of nearly 2 million tons from Argentina due to dry weather.Looking toward the upcoming 2013-14 crop year, the U.S. is expected to produce a record Corn crop, as producers are expected to expand Corn acreage to as high as 97 to 98 million acres this spring. If Mother Nature cooperates this summer, we may see a Corn crop totaling nearly 14 ? billion bushels!
???? Technical Notes
Looking at the daily chart for May Corn, we notice that since October of last year, prices seem to have formed a consolidation pattern, with the upper boundary near the 770.00 price level and the floor near 675.00, though some may argue that the break below 700.00 was short-lived and an outlier.
The 200-day moving average is hovering near the 700.00 price level, which is adding to the importance of this level as a support area. The 14-day RSI has turned neutral to weak, with a current reading of 41.85. Support is seen at 703.00, with resistance found at the February 1st high of 747.50.
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