Chicago Board of Trade Market News
Outlook: Corn is back trading on the low end of the recent trading range and it looks technically weak. The trade figured that USDA’s February 9, 2016 WASDE report would reflect higher ending stocks but it tinkered with corn more than expected. U.S. corn exports for MY 2015/16 were cut by 50 million bushels, and imports were raised by 10 million bushels. After other adjustments, ending stocks were raised 35 million bushels. Meanwhile, forecasted world corn production was increased by 2 MMT more than expected, largely due to increases in Argentina (+1.4 MMT) and Brazil (+2.5 MMT). The market had expected reductions in South American production.
Nearby corn futures are now within a few pennies of their lowest level since September 2014. Recent rains in Argentina and Brazil have been helpful, and conditions have even improved somewhat in South Africa. Late planted corn in Argentina will need more rain as it hits the flowering stage. Some expect corn imports by South Africa could only be 4 MMT, but others dispute that number. Ocean freight is cheap, rail freight continues to be plentiful and lower in cost, grain is much cheaper and yet demand cannot be bought. Russia will deny corn imports from the U.S. for purported quality violations, though it is really based on geopolitics.
Final U.S. export data for 2015 shows an overall favorable year for sorghum sales to China, even though shipments were falling in the last half of the year. However, it was hay exports that remained bullish all the way to the end of the year, yielding a 21 percent increase over 2014 and an average price 21 percent higher than the previous year.
The next big USDA report to be anticipated by the trade is release of the 31 March planting intentions by U.S. farmers.