Can Livestock Bull Market Save Corn?
Today’s Spotlight Market
Corn prices have been in a multi-month slump, as the global carryout is expected to be on the high side.? Bulls are hoping that higher livestock prices will awaken Corn from its slumber.? Milk prices hit a record high of $22.47 per hundredweight.? The combination of cheap feed and high meat prices may encourage farmers to use more feed to squeeze the most weight possible out of their livestock. ?
Fundamentals
While traders are hoping Cattle prices will drive demand for Corn, actual supply and demand has a less rosy tone.? Weekly export inspections were at 29.8 million bushels, which is higher than the USDA weekly average prediction of 28.6.? This has a slightly bullish tone, but is not exactly earth shattering.? Cumulative shipments for the season are at 36.1 % versus the 5-year average of 35.8 % sold during the time frame.? The South American crop, most notably in Argentina, got off to a slow start.? Dry December conditions put pressure on the Argentinean crop in the early going, but the forecast is showing rain on the horizon.? There has been some talk that the Brazilian Corn crop could be larger than that USDA estimate of 70 million tons.? Some forecasts are even calling for a crop exceeding 75 million tons.? This could hurt US Corn exports, as trade partners could opt to buy cheaper South American exports instead.
Technical Notes
Turning to the chart, we see the March Corn contract continuing to trade near multi-month lows.? Thus far, prices have been able to hold above the 400 level, which could be seen as neutral to positive.? Failure to hold the 400 level could be seen as a breakdown and may lead to long liquidation.? The RSI has recovered from oversold levels and sits in neutral territory.
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