Chicago Board of Trade Market News
Outlook: Corn markets were largely influenced by the bears this week with new contract lows occurring in the December contract on Tuesday. The weather remains nearly ideal in the Midwest with more rains forecasted for this week. Parts of Michigan and Ohio are drier-than-ideal but should not significantly impact the U.S. crop. USDA kept the corn crop rated at 76 percent good or excellent this week and some private sources are calling for a national yield near between 171-175 bushels per acre. The trade is looking for USDA to increase the corn yield in next week’s WASDE report.
Thursday’s export inspections for corn fell again from the previous week to 45.0 million bushels but remained above year-ago levels (36.2 million bushels). Year-to-date inspections for the 2015/16 crop total 1.583 billion bushels, down 2 percent from the prior year and missing USDA’s projected demand increase of 2 percent. Opportunity exists for U.S. exports to increase, however, due to a smaller-than-expected crop in Brazil and the pending large U.S. crop. U.S. Gulf prices as of Thursday’s market close were $0.81 below Brazilian port prices – an abnormally large difference that bodes well for U.S. exports.
The CME Group reported a decrease in total agricultural products trading volume for July with futures-only corn volume falling 27 percent and corn options volume falling 32 percent. The latest CFTC data shows commercial traders decreased their short positions by 46,000 contracts while funds added 38,000 contracts to their short positions. Non-commercial traders are now nearly even in their positions with a slight lean to the short side.
December corn is working its way lower this week. A new contract low was reached at $3.29 on Tuesday as the market broke key support at $3.33¼ before bulls pushed the market higher for the close. Tuesday’s buying interest shows traders are willing buyers at these low prices. For now, corn will likely remain in a sideways consolidation phase while further information on export demand and the size of the U.S. crop is gathered. Support is noted at Tuesday’s low of $3.29 while resistance lies at $3.46. Should the December contract close below $3.29 the next target will be at $3.18 – the October 2014 contract low. The national average corn basis strengthened one cent this week to $0.29 under the September contract as farmers continue to be reluctant sellers at current prices.