Chicago Board of Trade Market News
Outlook: December corn futures remain under mild bearish pressure and have made two new contract lows since last week’s WASDE report. The selling pressure isn’t tremendous, but there is little buying interest to keep prices from heading lower. Exports continue to disappoint, and ethanol production is one of the few bright spots left in the corn market.
Corn exports are down 41 percent versus this point last marketing year. Typically, corn exports have reached 17 percent of their eventual total by mid-November, but current export totals are only 13 percent of USDA’s forecast total. USDA may yet lower their forecast or, more likely, U.S. corn exports will eventually pick up as competition from South America wanes. Even so, the U.S. will have to export 39 million bushels of corn each week from here forward to meet USDA’s projections. Last year, corn exports exceeded 39 million bushels 30 of the 52 weeks in the marketing year, but exports have yet to reach that figure in this year’s 10 elapsed weeks.
U.S. ethanol production was essentially steady with last week, reaching 309.88 million gallons. Last week was the fifth consecutive week in which daily production exceeded 1 million barrels. Corn used for ethanol production has exceeded the weekly pace needed to reach USDA’s projection of 5.450 billion bushels every week this marketing year except one. USDA will likely raise their corn used for ethanol figure in subsequent WASDE reports given ethanol’s strong demand so far.
Corn planting in South America is progressing more slowly than normal, with 54 percent of Brazil’s crop planted (versus 69 percent this time last year) and Argentina’s 35 percent complete (versus 37 percent last year). Argentina’s weekly pace has been slower than normal as dryness exists over much of the country. Should the dryness continue, the planting could be further delayed. Currently, the South American weather fails to create a bullish influence for corn, but could do so in the future if conditions worsen.
Technically, December corn is in a bearish trend and little support exists close by. Some may be found at $3.30, a key point from last summer’s trading, but the most significant support lies between $3.15-$3.20, a double bottom formation on the long-term charts created by the October 2014 and July 2016 lows. To reach these points, one must wonder from where additional selling pressure will come. Commercials are largely sidelined, harvest is nearly complete, and the market is incentivizing farmers to store grain, and funds already hold a large short position. At the same time, unless the weather in South America deteriorates further or a major policy development occurs, it’s equally difficult to foresee much buying interest. The most likely case is that December corn will continue to choppily trade slightly lower, finding psychological support at $3.30 and possibly $3.20 later.