Chicago Board of Trade Market News
Outlook: Forecasts of summer rains sent corn bulls into hiding this week. The forecast turned milder and wetter for the coming 10 days, which means the corn crop should improve its condition ratings substantially. Yield models are still predicting below-normal yield for most of the U.S., given the troubles the crop has endured so far. However, with ample global supplies, anything less than a large blow to the U.S. corn crop will prove insufficient to rally the futures market.
This week’s Export Sales report from USDA was bullish for corn with 12.4 million bushels sold, versus 5.5 million in sales needed this week to reach USDA’s projections. Weekly exports, however, were just under what was needed to keep pace with USDA’s projections, coming in at 40.2 million bushels versus 41 million needed. Outstanding sales dropped to 360.6 million bushels, 28 percent less than this time last year. The report shows robust demand for U.S. corn, which should continue as FOB NOLA prices are within 10 cents of FOB Paranagua, Brazil prices.
At this point, the market is almost solely trading supply numbers. Demand, both domestically and internationally, is well established and looks to close the marketing year without surprises. Several supply-side risks remain, however, even beyond the weather.
Tomorrow’s Acreage and Grain Stocks report from USDA will be a key piece of information. The trade is expecting a neutral acreage figure, but the report could be bullish if more of the Midwest was flooded out than analysts currently realize. Similarly, the June 1 grain stocks figure has a strong possibility to be lower than expected. Some view the report as having more bullish potential than bearish, given the beating futures have taken this week. The average analyst’s estimate of June 1 grain stocks is 5.16 billion bushels.
From a technical perspective, July corn is in a very interesting position. The contract fell precipitously last week but found support near $3.57, two November daily trading lows. Below this point, the next significant support comes from the life-of-contract low at $3.40 which was made at the end of August 2016. Stochastics say the contract is oversold but the RSI does not. From here, it’s a fundamental game and there seem to be more bullish risks than bearish.