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Commentary

The corn market closed slightly weaker with another small 3 1/4 cent daily trading range. Daily trading volume today and yesterday have been the lowest of the year. Funds were only light sellers of corn with only 2K contracts attributed to speculative activity. Ethanol production as reported by the EIA came in strong with week-on-week output up 30 TPBD At 1105 (Total Bushes per Day) last week’s production is 2.3% above a year ago. Stocks also saw a net build from last week, up 273 tb to 22837 tb. Stocks remain under a year ago with this week 3.7% smaller. Low corn prices and firm ethanol values continue to produce strong production margins for ethanol plants in my view.

Early yield reports across Missouri and southern Illinois have been somewhat disappointing from the record potential seen a couple weeks ago and the dry finish to the growing season seems to be taking at least the top end off of yields in the driest areas. I think USDA should pick up on this with their in-field surveys and pull yields lower on Friday. On the other hand, last year's late dry spell to the growing season took until the January report for USDA to finally acknowledge the issues. But in my opinion the USDA does have a strong tendency to lower yields at least to some degree from the August report to the September report, which has happened in 4 of the last 6 years. December corn has stalled over the last few sessions at downtrend resistance from the highs since mid-April. Weekly sales for future shipment for corn tomorrow morning are expected in a range of 900,000 - 1,700,000 metric tons.

Trade Idea

Futures-Buy the Dec corn 25/26 corn spread at 43 cents Dec 25 under.

Options-N/A

Risk/Reward

Futures-Risk 8 cents from entry with a sell stop GTC at 51 cents Dec 25 under. This risks 8 cents or $400 from entry. Work an offer at 21 cents Dec 25 under for a 22 cents gain.

Options-N/A

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Sean Lusk

Vice President Commercial Hedging Division

Walsh Trading

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