The big picture of the market continues to lean bearish with nothing for the bulls to gain momentum from in the short term. Bearish private crop forecasts and thoughts that the USDA will increase the US ending stocks estimate above 2 billion bushels no doubt favors the bears. Demand is beginning to build beneath the surface as prices move lower but not in a way that demands a strong price rebound at the moment. With world ending stocks sitting at the highest level in the last 12 years, it’s seems there will be enough corn for everyone and unfortunately, the US is the most expensive as we sit today. The grind lower is likely to continue although strong end user demand is sure to show up around 450 for December corn. Open interest increased by 5,528 on the move lower yesterday.
TODAY’S MARKET IDEAS
Our first downside objective of 455 was hit overnight and a move through this level leaves the 438-435 zone as next chart support. Resistance doesn’t come in until 482 3/4. Rallies continue to be extremely shallow and without a strong catalyst for a rebound, the grind lower could continue. A large sales announcement to Mexico and/or China might be the trigger for a short covering rally although buyers remain hand-to-mouth given the world production outlook. Back-end corn spreads like the Dec 13/March 14 and the July 14/Dec 14 are pushing out (Increased carry) which leans negative for flat price direction. We have long held 455 as a downside objective and a higher close today (reversal) can not be ruled out. Keep in mind; the COT reports show a record spec net short position in corn.