Chicago Board of Trade Market News
Outlook: Last week’s planted acreage and stocks reports continued to reverberate through the market. Having more than expected acres of corn and larger than expected stocks, the largest in 29 years, invoked heavy downward pressure on prices. Moreover, the new crop remains at 75 percent good to excellent condition. In addition, corn silking was at 15 percent, up from last year’s 10 percent and the average of 13 percent. Corn inspected for export was an unimpressive 45.9 million bushels last week.
Despite a view that the market is over-sold, the CONAB report is the only thing that kept the market from retesting the April 1, 2016 low of $3.5575/bushel. Indeed, the market was due a snapback correction and it found a rationale in CONAB’s announcement that the Brazilian corn crop is over 7 MMT smaller than forecast one month ago. This was apparent even before CONAB’s announcement given that prices in Brazil for feed alternatives such as millet and sorghum have been soaring and are now at parity with corn. Still not accounted for in the market is the fact that the Argentine corn crop continues to get soaked with rain, slowing harvest and raising moisture levels to 18-19 percent. This means continuing penalties for non-delivery, plus the risk of damage.
Prices in Chicago could go lower but future declines will become harder to defend at some point, and the risk of adverse weather impacts is not completely over. Some say that anything below $3.50 is risky.