Chicago Board of Trade Market News
Outlook: Traders have not been kind to the corn market. December corn futures have lost 14 cents in the past two weeks and over 40 cents since the end of July. The biggest factors have been improved weather across the Corn Belt and USDA’s 2017 yield projection of 169.5 BPA.
Despite better weather and USDA’s projection of a large corn crop, skepticism remains. Farmers and crop scouts across the Midwest are reporting severely dry fields and ears with significant pollination issues. Additionally, parts of Iowa have been hotter and drier in 2017 than they were during the massive 2012 drought. These factors all but assure that USDA will lower its yield estimate in a later WASDE report. Until then, however, the market has to trade the best available information, which – in this case – means trading a 169.5 BPA national yield.
USDA’s export sales report was neutral/slightly bullish for corn. Old crop net sales of 2.5 million bushels were above the 1.1 million needed in this week’s report while the 27.5 million bushels exported last week were half of the 41.1 million required. This week’s activity puts total 2016/17 sales at 2.223 billion bushels, nearly equal to USDA’s export forecast. YTD exports stand at 2.086 billion bushels, 23 percent ahead of last year and on-target for total demand of 2.243 billion bushels.
Bearish news came from reports this week that Brazilian farmers – particularly those in Mato Grosso – are having to store corn in open air piles on the ground due to lack of storage space. Brazil’s incredible production this year has outweighed its storage capacity, which would typically induce a wave a farmer selling and pressure price. However, falling prices at the CBOT this week have pressured U.S. and Brazilian export prices, effectively discouraging any farmer sales in Brazil. The lack of selling now means U.S. farmers may face more competition later in the marketing year.
From a technical perspective, December corn is heading lower with little to stop it. The market is oversold but the contract has consistently put in new lows this week. Psychological support will likely be found at $3.60 and more at the life-of-contract low at $3.58 ½. At some point, the market will have to reckon with USDA’s probable yield reductions in the September, or more likely October, WASDE – but that time is not now.