Chicago Board of Trade Market News
Outlook: The only demand story that can be found for corn is that last week’s Commitment of Traders report showed much larger short positions (247,000 contracts) in corn futures and options than expected, prompting some short covering. Today’s drop in the dollar is not a demand story. Until today there was only some covering because there just isn’t enough interpreted risk for those with huge short positions. Today showed a new source of risk, dollar volatility, but the market is without any fresh fundamental input. It certainly received little fundamental input from USDA’s March 9, 2016 WASDE where the agency apparently decided that it also needed more information before it starts making any major changes to its numbers.
USDA lowered 2015/16 beginning world corn stocks about 1 MMT and reduced production fractionally while upping world corn use a similar amount. Ending 2015/16 world corn stocks were 1.8 MMT lower than February, but they remain very large at an estimated 207 MMT. The WASDE report also lowered estimated feed use of wheat, which seems at odds with some of the prices being offered.
Looking ahead, the March 31, 2016 planting Intentions report and spring weather for northern hemisphere planting could be real market movers. The Corn Belt is virtually drought-free, save for a few counties in northern Minnesota, and USDA meteorologist Brad Rippey says that it has been 11 years since the last time the Midwest had an eight-week long stretch with such little drought. The odds would suggest drought is due but AgDay meteorologist Mike Hoffman predicts above-normal precipitation over the next 90 days. That will either help or hurt crop planting depending on the pattern. Still, don’t expect the warmer than normal weather to prompt farmers to plant early – their crop insurance contracts prohibit it as protection against a late frost.