Is a Two Billion Bushel Corn Carryout Total Within Sight?
Reports of higher yields and the potential for slower demand from Ethanol producers have traders looking for a large Corn surplus. Analysts are continuing to raise their estimates of this year’s crop, with private forecasters looking for a total somewhere between 13.3 and 13.5 billion bushels. Weather forecasts are calling for near perfect conditions for harvesting this weekend, which may spur additional hedge selling as producers move Corn to local elevators. U.S. export sales appear solid, with Corn export sales expected to come in between 1 and 1.4 million metric tons last week – the totals will be reported in this morning’s USDA weekly export sales report. Large speculators continue to hold a large net-long position in Corn, with the most recent Commitment of Traders report showing large non-commercial traders net-long 193,687 contracts as of September 25th. If next week’s USDA crop production report holds a bearish surprise for traders, this large long position may be the catalyst for a sharp sell-off should the funds start to liquidate their Corn holdings.
Looking at the daily chart for December Corn, we notice prices below the major moving averages, despite a moderate rally in overnight trading. The 14-day RSI remains weak, with a current reading of 38.35. December Corn is holding just above an area that appears to offer decent support between the $3.30 and $3.40. Should support hold, a test of the 20-day moving average near the $3.60 area is a definite possibility. At the end of the overnight session, December Corn is trading at $3.48 ¾, up 4 ¼ cents.
Mike Zarembski, Senior Commodity Analyst
