David Fuller's view You may recall some of the earlier reports and comments from this knowledgeable source. The most diligent of researchers and very successful corn trader, John has repeatedly said that the USDA was way overestimating US supplies of corn from last year's crop. This printout of futures prices from Bloomberg today strongly supports his view. Note the backwardation for the expiring May contract and also the July 2012 position (the last of the old crop contracts) versus the new crop (now growing) commencing with the September 2012 contract.

John telephoned yesterday evening and told me that some cargos of spot corn had recently traded near $7, including expenses. Briefly, he said this can only indicate that the US is rapidly running out of old crop corn. Otherwise, and the logic is very clear, if farmers had the supplies previously claimed by the USDA, why would they not be selling all of it at these prices, knowing that new crop corn is off to a promising start and that prices will be much lower if conditions remain favourable when the early harvest for new crop corn commences in August and September.

He thinks there will be a squeeze on the July contract, commencing in the near future. I can certainly see the logic of John's view. My only reservation is that commodities have been under a considerable amount of selling pressure recently and I do not yet see evidence in the price chart (weekly & daily) that corn will reaffirm support in the $6 region. If / when that strength emerges, it could be significant. Meanwhile, soybeans (weekly & daily) have been the outperformer in recent months and again today, but became overextended and lost upside momentum after a key day reversal following the high on 2nd May.