Corn Rally Stymied on Lackluster Exports
???? Fundamentals
The recovery in Corn prices the past several sessions stalled on Friday, as a subdued outlook for U.S. Corn exports and expectations for a record Corn crop this season weighed on prices to end the week. Old crop Corn sales totaled just over 92,000 tons last week, which is well below the weekly average needed to meet USDA forecasts. Current sales are running about 5% below the 5-year average for this time of year.
New crop Corn is seeing some weakness tied to what is anticipated to be a record crop this coming season. The International Grains Council just announced that they expect U.S. Corn production to increase by 30% this coming season. Some analysts are looking for U.S. Corn plantings to come in between 96 and 99 million acres, and almost every forecaster is looking for a 14-billion-plus Corn crop this coming season, assuming Mother Nature cooperates.
Government weather forecasts for the next few months favor normal to above normal temperatures and precipitation for the Corn Belt which, if accurate, should provide for an excellent start for the Corn crop heading into summer.
???? Technical
Looking at the daily chart for May Corn, we notice that the market briefly traded above the downtrend line drawn from the Contract high made back in August of last year. However, the rally in old crop Corn could not hold, as continued weak export sales and the prospects of a record Corn crop spooked some weak longs into liquidation positions.
Prices are holding right at the 200-day moving average and are currently just above the 20-day MA. We note that trading volume was declining on the recent rally attempt, which may indicate a lack of aggressive new buying on the recent up-move. Near-term resistance for May Corn is seen at the recent high of 734.50, with longer-term resistance seen at 750.00. Support is found at the 20-day moving average, currently near the 709.50 price area.
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