Chicago Board of Trade Market News
Outlook: After losing $1/bushel the previous week, the market absorbed a less bearish than expected WASDE report and a high pressure ridge starting next week that will impose above normal temps (+10-15 degrees to near 100F/37.7C) and have little moisture for the Midwest corn crop. The endurance of the ridge is the question? Will it last just a couple of weeks or will it endure well into August? Half of the crop is pollinated but a long heat wave will impact on the filling of the ears. This will impose a see-saw situation on the market as Brexit and the June 30 USDA reports bled out all of the weather premium that now must be put at least partially back into place.
The WASDE lowered the disappearance of corn for feed and ethanol uses, but more than offset that with an increase in expected exports. Even so, carryout levels remain large, 1.7 billion bushels in 2015/16 and over 2 billion bushels in 2016/17. The trend remains bearish with resistance to any movement above $3.68/bushel. Bears can try to push it below the current support level of $3.46/bushel but there is no indication that farmers are willing to sell at such a level.
Last week’s corn exports and outstanding export sales (668,055 MT and 1,242,125 MT, respectively) were considered neutral to bearish despite year-to-date levels being 31 percent above a year ago and 71 percent above the five-year average. This is because they are not at a pace to meet USDA’s forecast for the year. Moreover, Argentina is expected to have cleared up its logistical hurdles and be more export competitive in September.
CME increased the required level of margin by speculators and the July contract expires today.