CORN: Weather Still a Bit Threatening; Offset by Outlook Forum Data
Dry conditions continue to be a concern for immature corn in Argentina. The country continues to see poor growing conditions and any showers will be limited for the rest of February and at least the front half of March, keeping stress high. Another burst of heat could come next week as well. Scattered showers continue for much of Brazil's growing regions for the next week outside of Rio Grande do Sul, where showers will be more limited. The rains will continue to cause delays for soybean harvest and safrinha corn planting, putting the corn at risk when the dry season begins in two months. Producers are having trouble making up ground, but the pace is still rather rapid given the rainy conditions. Corn already in the ground will benefit from the available moisture. The Buenos Aires Grain Exchange revised their Argentina corn production estimate down to 41 million tonnes from their previous estimate of 44.5 million tonnes and from the February USDA estimate of 47 million tonnes and the January USDA estimate of 52 million tonnes.
May corn closed sharply lower on the session yesterday and the selling pushed the market down to the lowest level since January 12th. The USDA Outlook Forum data carried a bearish tilt with ending stocks coming in at 1.887 billion bushels from 1.267 billion this year. This was calculated using a trend yield of 181.5 bushels per acre. If yield comes in 3% below trend, ending stocks would still increase to 1.432 billion bushels from 1.267 billion this year. The USDA pegged corn planted area for the 2023/24 season at 91 million acres from expectations for 90.9 million acres, 88.3-92.0 range, and compared with 88.6 million this year. Production was pegged at 15.085 billion bushels from expectations for 14.888 billion bushels, 14.000-15.320 range, and compared with 13.730 billion this year.
Average daily ethanol production for the week ending February 17 averaged 1.029 million barrels which was above the range of trade expectations. This was up 1.5% from last week and up 0.5% from last year. Ethanol production for the week was 7.203 million barrels. The amount of corn used for the week is estimated at 103.4 million bushels. Corn use needs to average 101.7 million bushels per week to meet the USDA's marketing year forecast. Ethanol stocks were 25.588 million barrels from trade expectations for 25.399 million. This is a new high stocks level for this week of the year. This is highest since April 1, 2022 and was up 1.0% from last week and up 0.3% from last year. For the weekly export sales report traders see corn sales near 600,000-1.4 million tons as compared with 1.125 million last week.
TODAY'S MARKET IDEAS:
While the market seems to have the weather outlook to expect further gains, the sharp drop in open interest recently might suggest a long liquidation selling trend. The technical action is bearish with resistance for May corn at 661 1/4 and 667, with support at 655 1/2. If support gives way, 636 3/4 and 617 3/4 become next targets. December corn resistance is at 589 1/2, with 578 as next target.