Corn Prices Hold Steady as Traders Shrug-off Crimean Succession Vote
Today’s Spotlight Market
Concerns of a potential slowing of grain exports from the Black Sea region have been seen in the price reaction of old-crop/new-crop Corn spreads. The May 2014 vs. December 2014 Corn spread has rallied over 25 cents since February, with the May contract trading at a premium to the December futures last week. The most recent Commitment of Traders report shows non-commercial traders (large speculators) adding over 50,000 new-net-long positions for the week ending March 11th. Commercial traders were on the other side of this trade as producers were taking advantage of the recent price rally to unload ?old crop Corn? prior to the USDA prospective plantings report due out at the end of March.???? ?
Fundamentals
This past weekend?s referendum regarding the succession of the Ukrainian region of Crimea was met with shrugs by Corn traders as Ukrainian grain shipments have been unaffected so far. Ukraine loaded 700,000 metric tons of Corn for export last week, with few signs that grain shipments are starting to slow. Ukraine is a major global grain exporter and is currently ranked 3rd in Corn shipments.
Speculators have been somewhat aggressive buyers of Corn recently, mainly on the potential that grain shipments from the Black Sea region could be affected by current political instability in Ukraine. This supply uncertainty combined with short-covering buying allowed May Corn to briefly trade above $5 per bushel earlier this month. This was the highest price paid for lead month Corn futures since August of last year and has turned short-term momentum positive for Corn prices.
Old-crop Corn futures also received some support from? the March USDA supply/demand report which raised projected Corn exports by 25 million bushels and lowered old-crop carryover estimates by the same amount. Grain traders should expect choppy trading activity the next several sessions as market participants begin to position themselves for the release of the USDA prospective plantings report.
Trading activity following the release of this report has been historically volatile, with limit price moves not uncommon. Average estimates are for between 92 and 93 million acres of Corn to be planted in the U.S. this season, with some bullish traders looking for a smaller number closer to 91 million acres. Given the recent run-up in prices from recent lows, it may take a sub 90 million acre number from the USDA to get Corn traders aggressively bullish going into the spring planting season. ?
Technical Notes? -? View Today’s Chart
Looking at the daily chart for December Corn, we notice what appears to be a rounded bottom formation. If true, this could be a sign that a major low has been put in place. In the short-term we note that prices have formed a consolidation pattern as recent market moves have prices sandwiched between the 20 and 200-day moving averages. Volume has fallen during the formation of the consolidation pattern which is fairly normal for this technical formation. The 14-day RSI has moved below overbought levels but remains fairly strong with a current reading of 59.11. Support is seen at 471.25, with resistance seen at 493.75.
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