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This corn market still requires patience and attention

From a technical perspective, I still see nearby DEC17 upside resistance in $3.65 to $3.75 range.

Corn bulls are talking about seasonal lows being posted, shorts covering into the end of the month and ahead of the extended holiday weekend, as well as DP selling pressure drying up, as reasons for yesterdays rally. There's also talk that extended dryness and slow maturity across portions of the corn belt could weigh on yield.

In fact a couple of private estimates circulating the past couple of days have the U.S. corn yield estimated at between 165 and 167 bushels per acre, which is well below the current USDA estimate of 169.5 bushels per acre. For most private analyst their new estimates are +4 to +5 bushels higher than the were 30 to 60 days ago. I should also note, there's been several charts floating around the trade the past few days that have overlaid 2015 and 2016 price action on top of 2017, all showing fairly similar patterns with the 2015 and 2016 lows being posted in early-September.

That action was followed on the charts by a short-covering rally or rebound in price into mid-October, then perhaps lower again into mid-November. Bottom-line, there's several sources inside the trade that believe crop years with burdensome supply and what appears to be a near trend-line yields coming out of the fields, the market will overreact and post its lows earlier rather than later. Hence, more talk that the big push lower in price might have ran its course, at least for the time being. Personally, I'm not holding my breath.

I'm still staying extremely patient and keeping all hedges in place. I don't really think anything has changed. Fundamentally we are still going to be flush with supply and battle Brazil step-for-step to win export business. I also believe ethanol could run into a few headwinds later in the year, meaning bullish demand headlines could be limited.

From a technical perspective, I still see nearby DEC17 upside resistance in $3.65 to $3.75 range. I want a rally just as bad as everyone else, but I'm not 100% sold on this being the turnaround we've all been waiting for? It's going to take a bit more than a head fake to make me a big believer. The weather over the weekend and opening on Monday night will certainly garner my attention.


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