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TBR – Weekly Corn Summary

Certainly no lack of volatility in this market. From a technical perspective, the market rallied sharply in the last week and a half, but it may be over. Note in the March corn chart, the high at $4.52 on October 2 and the low on October 17 at $4.14. The 50% retracement of that move was $4.33 ½. This week’s high was $4.36 ¾. That does not necessarily mean the market is going down significantly. It only indicates that the short-term rally may well be over. A choppy trading pattern will now likely occur.

Harvest has been rapid, progressing 35% in the last two weeks. By Sunday it will be around 80% complete. Very little corn left in the field. Yields were good and in a few areas they were outstanding, but those are partially offset by some lower yields in Minnesota where it was too wet this spring and other areas in Nebraska where the wind did some damage.

Exports have been extremely good recently, as you can see below at left USDA has announced fresh “flash” sales of at least 100,000 metric tons every weekday since Oct. 16. This is the outcome of low prices. We bumped our exports expectations by 100 million bushels this week, which lowered the carryover to 1.955. That lowers the stocks-to-usage ratio to 13% and we’re starting to look at more favorable prices.

Also on the bullish side, current prices will discourage increased acreage in South America. Demand numbers will continue to improve at current low prices as buyers will become more convinced the bottom is in.

Cash-only Marketers’ Strategy: Continue to sit tight right now at 50% sold that was priced months ago. Be patient.

Hedgers’ Strategy: Forty percent of this year’s crop was priced months ago and we remain short December $5.00 calls on 20%, which we will just let expire at zero. Early in the week, we exited short March corn futures on 10%. Do so now if you didn’t at that time.

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