Potential for Planting Delays Supporting New-Crop Corn Prices
Fundamentals
Following a year of extreme heat and drought conditions, many grain producers are welcoming a return of adequate moisture levels as the spring planting season begins. However, it appears that this season’s April showers may become too much of a good thing, as heavy rainfall has spread through the central Corn Belt, with the potential flooding keeping producers out of the fields. In addition, cooler than normal temperatures have kept the northern area snow covered due to heavy spring snowstorms, also bringing fears of flooding for the Red River Valley. North Dakota producers were expected to plant over 4-million acres towards Corn this season, however this estimate could prove too high if growers cannot get into the fields by mid-May. Weather conditions during the next few weeks may determine the early trend for new-crop Corn prices, with warmer and drier conditions allowing planting to progress and adequate soil moisture bringing near ideal conditions to start the season. However, if we see a continuation of cold and wet weather forecasts, some traders may start to price-in some sort of weather premium, as the Corn market can likely not sustain two consecutive years of a short grain crop out of the U.S.
Technical Notes
Looking at the daily chart for December Corn, we notice prices holding near the upper bounds of a 25-cent plus consolidation pattern. Movement above 550.00 seems to be drawing in some selling pressure, which may be tied to hedge selling, though most likely aided by large speculators looking for lower Corn prices later in the fall. Thursday’s decline took prices back below the 20-day moving average, which is giving support for commodity bears looking for an overall decline in commodity prices this year. The 14-day RSI has turned lower, with a current reading of 46.38. Support is seen at the April 1st low of 525.50, with resistance found at the high of the recent price consolidation at 551.00.
