Chicago Board of Trade Market News
Outlook: Markets continued their buying strength this week moving 15 cents higher from last Thursday’s close. Funds started the week with large short positions in corn and began positioning for the Labor Day holiday late last week. Accordingly, some of the corrective action seen this week was driven by short covering in Chicago. Some bearish news was absorbed by the market on Friday as some private forecasters issued yield predictions exceeding the recent Pro Farmer tour’s yield projections. The most recent private forecasts fall short of USDA’s August WASDE figures but still imply record-large production for 2016/17. The corn crop appears to be in sufficient condition to achieve such yields as the USDA’s latest data shows 74 percent of the crop in good to excellent condition.
Due to the Labor Day holiday, the weekly Export Sales report from USDA will be released on Friday, one day later than normal. On Tuesday, the export inspections report showed 57.8 million bushels of corn were exported. Typically, such a volume would be bullish if not for the current market looking to reach USDA’s 2015/16 export target by the end of August. For the coming crop year, USDA is projecting a demand increase of 6 percent to work through the 15-billion-bushel crop. Export prospects remain good for the start of the crop year, given Brazil’s supply shortages, and some upside potential exists for U.S. exports.
December futures ground their way higher during the holiday-shortened week. The rally started by a correction from oversold technical conditions and pre-holiday short covering extended this week on delayed harvest concerns in the Central Plains states. Recent rains and forecasts for continued rain across key parts of the Midwest are adding some bullish sentiment that harvest may be delayed in areas. Rains at this time will not do much to help or hurt the crop itself, only make it difficult to execute a timely harvest. Corn remains under bearish pressure but broke two technical indicators this week by closing above both the 20-day and 40-day moving averages. The bullish reversal that formed on September 2nd leaves a bullish target and strong resistance at $3.44 ¼. On the downside, minor support exists at $3.23 and $3.16 before major support from the contract low is found at $3.14 ¾. Basis remains moderately weak at $0.40 under December futures while case prices have moved slightly above their lowest prices in seven years.