Iran-Israel Trade Strikes - The Corn & Ethanol Report

We kicked off the day with Consumer Inflation Expectations at 10:00 A.M., 3-Month & 6-Month Bill Auction at 10:30 A.M.

Iran fired a wave of missiles at northern Israel following a strike on Hezbollah in the Beirut suburbs. President Trump urged Prime Minister Netanyahu to exercise restraint and hold off a retaliatory strike. The IDF announced it attacked military targets in Iran. Stay Tuned to further negotiations.

The Commitment of Traders report showed another massive week of managed money selling in the agriculture markets. Across the 10 key ag markets, funds sold 187,515 contracts. The fund net long position fell to 647,853 contracts., reflecting liquidation of nearly 467,000 contracts in the last 4 weeks, and cutting the composite net long position to 42%. The largest selling was noted in the corn market, where funds were liquidating market length, while funds added to the net short position in Chicago wheat. Funds were net short 2 markets, up 1 for the week, with funds flipping to a net short position in hog futures. Funds were massive sellers in the grain markets at the end of the week, further cutting positions. After 6 consecutive days of major liquidation, lows are expected early this week.

Corn Comments & Analysis

Bottom Stays Elusive; Brazilian Market Follows US Lower:

CBOT corn’s bearish cascade continued for a sixth day, with macro markets joining and with July just .13/Bu above an open chart gap left at harvest last year at $4.05. This level is targeted, but the market is deeply oversold, and ARC recommends new end user purchases on further weakness. The correction is no longer healthy from a chart perspective, and the entirety of Northern Hemisphere growing season lies ahead. Selling should slow this week. Yet, rallies will be challenged through the balance of June. Managed funds on Tuesday were long a net 115,000 contracts, and are estimated to be long 45-50,000 contracts as of last night. Fundamentally, the market must also contend with a steady replenishing of physical supplies. 60% of Argentina’s crop will be harvested in the next 60 days. Brazilian safrinha ramps up after mid-June. Early corn harvesting in the southern US follows in August. Ag Resources (ARC) maintains that spot CBOT below $4.20 and Dec below $4.40 have value longer term. The oversold nature of the charts is unsustainable.