Corn could catch a bounce on much stronger than anticipated export sales? The problem is, we may not hold as Ukraine exports are starting to gain more attention as the U.S. dollar continues to surge higher.
The bears are talking about the fact many U.S. ethanol plants may soon be considering a "hot idle," meaning some ethanol plants might soon be forced to temporarily halt production as margins collapse. As of late ethanol production remains strong, but stocks continue to push higher and are now well above 20 million barrels.
Bottom-line: U.S. exports for corn are in question and ethanol production is being highly debated. Neither of these line items are bullish demand. On the supply side of the equation, most sources are talking about U.S. producers perhaps going back with more corn next year. The fall in soybean prices coupled with the new farm bill policy, corn has quickly become a more viable option.
There is also talk in Brazil that the USDA's current 75 MMT estimate is too low by perhaps 3-4 MMTs. Also keep in mind the International Grain Council (IGC) just bumped their world corn production estimate higher by 10 MMTS to 992 million.
From a technical perspective, I continue to keep my eye on the 100-day moving average at around $3.77 vs. the MAR15 contract. A break or close below this level could set the market up to test the $3.50 area. Producers should continue to keep hedges in place.