Corn was already in a downward correction when the USDA planting intention report, released in March, indicated a planting intention of 90 million acres, a 12 million acre increase over last year, causing a limit down move.
“If they haven’t installed the roller coaster tracks and the mechanical bull, they will,” says David M. Fiala, president and chief analyst at Futures One. He notes that corn has since filled the gap and that it’s now a weather trade. He expects corn at $4.10 per bu., unless cool wet weather drives it up to $4.50 or higher. “We have to get this crop in the ground,” adding that farmers can lose a bushel or two per acre per day that they wait beyond the second week of May to plant. If planting goes well, it could trade down to $3.40, but there is a 60% chance that the low is in, he says.
Despite the spike in planting intentions, most analysts are still bullish corn.
“It’s just truly a remarkable time for agriculture,” says Stephen Davis, senior broker at RJO Futures. “We think it is going to be like this for a couple of years,” he says, noting December corn traded at $4.01. “We never had new crop corn over $4.00,” which he picks as the May high. Support is at $3.40. Intermediate corrections are buying opportunities, “and then you have to own corn for the summer rally,” he adds.
Shawn K. McCambridge, senior grains analyst for Prudential Bache Commodities LLC, says from a technical standpoint we have done some damage, but weak long positions were squeezed out and strong technically motivated buying likely comes next. Short-term objective is either side of $4.00, and staunch resistance is at $4.24 with normal weather.