Market Thoughts 4/17/2022
May corn rallied 21’4 cents last week, finally making a new contract high and closing at 790’2. May corn has rallied nearly 90 cents since a low of 713’4 on March 29th. May soybeans lost 6’6 to finish the week at 1682’2. Nearly two months have passed since beans last made a new contract high. May spring wheat gained 17’2 to finish the week at 1144’4 but did close sharply lower on Friday after trading as high as 1169’6.
Bullish news continues to steadily surface and for corn that’s all it takes to easily move higher. The administration’s E15 approval announcement was a win for the ethanol industry. While the amount of additional ethanol grind will likely be negligible, it does suggest fuel wins in the budding “food vs fuel” debate, a very bullish outcome for corn. In a sign of the times, even bearish news –oppressive Chinese Covid lockdowns – is bullish as it was reported last week Chinese farmers face an extremely difficult time securing crop inputs due to the lockdowns. Planters idled across the Corn Belt and strong export sales certainly are supportive as well. And the Ukraine war looks like it will persist well beyond spring planting. Our historic North Dakota blizzard is a bit tougher to handicap as it likely ends up creating more bushels than it costs given the badly needed precip it delivered. For the moment though it keeps wheat markets on edge as 30+ inches of snow combined with a ten day forecast of extreme cold and additional precipitation means planting doesn’t start until early May at the soonest. Worth noting, it’s truly remarkable to go from the hottest/driest summer in a generation to the coldest/wettest April in history as weather moves become even more severe. Regardless, plenty of uncertainty right now and uncertainty is bullish.
CORN CONTINUOUS WEEKLY CHART
Nearby May corn closed at 790’2 this week, the highest weekly close since 2012 and apart from a handful of late summer weeks that year, the highest close ever. Corn now has its sights set on the intra-day high of 843’6 from 2012 and it sure seems after coming this far, corn is on a mission to make new all-time highs…
DEC CORN SEASONAL CHART
We’ve been tracking this seasonal comparison since early last fall and have referenced it several times along the way. The 2012 seasonal hasn’t felt as relevant for the past few months while the fundamental similarities to 2008 persist. But even with those similarities, 2022 corn is basically charting its own course now, rallying nearly uninterrupted since the start of the year. The similarities to 2008 coupled with the extent of the rally currently strongly suggest a late spring/early summer peak for corn (and hopefully not a 2008-style collapse.)