$5 Support Holds for Corn as USDA Stocks Weigh In
Corn prices are showing signs of recovery after hitting the $5 psychological level of support. According to Mike Castle with StoneX, the market is trying to digest the added inventory announced by the USDA on Wednesday.
The USDA added 173 million bu. to old crop stocks, which can be attributed to feed and residual usage. This increase is a huge bearish shock, exceeding even the highest analyst estimate of 90 million bushels above.
Corn futures were down 21 cents on Wednesday but have seen a mild bounce since then. Castle believes that at $5, end-user demand will uncover some good buying opportunities and funds may still be watching the long-term inflation story and looking to grains as a hedge.
He also noted that funds are looking for investments after the disappointment of the China Summit and that commodities tend to do well during times of inflation. Castle thinks that there is a ton of inflationary pressures concentrated at the producer level, which will eventually be passed on to consumers.