December corn had its seventh consecutive negative day yesterday settling down 5 cents on good volume. Funds sold 14,000 contracts making the spec funds short 225,000 contracts. RSI is 25 indicating the corn is getting oversold. The last time we closed lower than this level on the monthly charts was September of 2009. Spreads also widened on this break with Sep/Dec widening out to 12. That was 2 ¾ wider for the day. New crop spreads also widened with Dec/July trading wider than 25 cents. There were 440 contracts of Sep corn delivered last night. This was a more than expected and could be a little bearish to the spreads.
Resistance in CZ is $3.27 and then $3.36. Support is $3.15 and then $2.97.
We saw very little farmer selling yesterday on the break. We hear early harvest reports of great yields, but we are hearing a few reports not as good as expected. A well followed advisor and crop scout lowered his corn crop yield and production estimate, but the market shrugged it off. Western basis remains under pressure with most of the users mostly covered for fall into early winter. Elevators’ selling new crop hedges to make room is the main reason for the weakness. Logistics and forced farmer selling should continue to pressure spreads and basis. The smart guys still want to sell the next bounce we see.
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