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Veteran Contributor
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Registered: ‎09-20-2018
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Corn Market Update For November 5

Well it sure is getting suspenseful in the corn market the last few days. Prices are fighting a heck of a fight to stay above $3.70, and so far they are make ground in that objective, albeit grudgingly. We've had two consecutive closes now above $3.70, with slight increases in Volume and Open Interest. Charts are trying to turn positive, and right now all that is needed is some bullish news out of a government Yield Report (which I believe is on tap  for this coming Thursday, November 8) and the market should make a test of the $3.85-$3.95 area, which is the next really good price region to place more production to buyers.

 

The market whispers are saying that they expect little change in Yields or acreage in the upcoming government report. That would not be supportive for corn prices. However, there are some rumors running around saying that the government is going to reduce somewhat sharply the World Endstocks for 2018-2019 in the coming report,  and that rumor was a main driver that supported prices in Monday's trading. 

 

There are always two problems with rumor-driven markets. The first is that the rumor may not materialize, in which case whoever bought on the basis of the rumor will be looking for an exit. The other problem is that if a large number of market participants buy heavily on the rumor, even if it is confirmed, every one who wanted to buy already has done so. In what is known as a "buy the rumor and sell the fact" market, when those who bought on the rumor don't find new buyers when the rumor becomes fact, they head for the door quickly and kill the rally spawned by the rumor.

 

As it stands right now, rumor or not, the corn price is acting in a positive way that suggests the prior 50-50 possibility of trading into the $3.85-$3.95 will actually turn out that way. But there's a lot of heavy lifting to do before those prices are seen, for as the market is showing in its struggle to move higher, the buyers are quite reluctant to aggressively take in supply at these prices. While the odds have improved for higher prices, they are far from overwhelming, and no one should feel really confident that the next move is higher than lower in price. Unless the fundamentals regarding World Endstocks have changed substantially, the rest of the corn supply demand fundamentals continue to be characterized by what appears to be a very large supply coming to market from the present harvest, and some rather shaky economic numbers in the overall economy, which is why the stock market has been giving up ground for the last month. 

 

Speaking of harvest, the national corn harvest as reported this afternoon after the market closed is now estimated to be 76% complete, which compares to 68% at this point last year and spot on the five year average for early November of 77%. The Dakotas are the only States that are more than 10% below their five year average for completed harvest at this point of the calendar, but they both made significant progress in getting their crop harvested during the last week. Surprisingly the farmers in Iowa have 72% of their corn in from the field, only 4% lower than their five year average. Its surprising because from the reports registered here several weeks ago from out=r friends in Iowa, it sounded like they would be buried underwater for a good part of the next century and their crop would never get to the bin. Perhaps the Iowa farmers who don't visit us here were also the ones who avoided the epic rains that led many to believe that Iowa would be the new Atlantis.

 

Anyway, that's how it looks from here tonight, I am hopeful but not confident that prices will get to the mid $3.80s. But at least there's a chance for an early Christmas present., The trade plan remains the same, I would sell 30% of my production if given the chance between that next sell zone, so that I would have but a manageable 10% left to place should prices fall out of bed after visiting the next upside target,