Chicago Board of Trade Market News
Outlook: It seems a little early for corn futures to be in a “weather market” but the price action this week sure looked like one. On Friday, April 28, corn futures shrugged off forecasts of wet, possibly snowy weather over the weekend. On Monday morning, however, the tune had changed and grain markets jumped higher. July corn added 11 cents by the close, which paled in comparison to near-limit moves in wheat markets. The weekend brought heavy rains across Missouri, Southern Illinois, and much of the Upper Midwest. More notably, heavy snow occurred in Western Kansas and Eastern Colorado while Nebraska received lighter snowfall amounts.
The weekend’s weather exacerbated concerns about delayed plantings for the corn crop and added to them concerns about washed-out fields and some prevent-plant acres. Prevent-plant acres in Southern Illinois are perhaps the most concerning right now but much of the Corn Belt is still soggy and beginning to run behind the normal planting schedule. Should the weather not offer a substantial break in the next two weeks, there is a good chance a notable number of acres will go from corn to soybeans – or perhaps even remain unplanted.
Fortunately, however, the forecast for this coming weekend includes dry weather for the Western Corn Belt and Dakotas while Indiana, Southern Illinois, and Ohio could get up to 1 inch of rain. The drier weather across the western Midwest is good news for farmers and is helping relieve concerns at the CBOT. Still more comforting is the fact that U.S. farmers can plant an amazing number of acres very quickly with modern technology. If Mother Nature gives farmers enough of a break, planting progress could quickly leap forward.
Exports have been bullish the corn market for several weeks now, and this past week was no exception. USDA/FAS reported 2016/17 crop sales of 30.4 million bushels, well above the 11.3 million that was needed to keep pace with USDA’s demand projections. Similarly, exports of 48.3 million bushels were above the 42.5 million required this week to meet USDA’s 2.225-billion-bushel export forecast. YTD exports are up 51 percent while YTD bookings (exports plus unshipped sales) are up 37 percent. With the South American crop coming to market soon, the current export pace is encouraging given that there are still over 180 million bushels yet to be sold if USDA’s demand projections are to be met.
The latest CFTC data showed funds with a substantial short position, but that was before last weekend’s weather. Sizable short-covering was noted on Monday but funds have again turned to at least mild selling in recent days. This week’s data is likely to show a much smaller short position held by funds but it will not account for the trading activity on Wednesday or Thursday. Reportedly, funds have turned into sellers again today with the improving weather forecasts.
Going forward, the corn market will likely follow one of two patterns. Either deteriorating weather will spark another CBOT rally or improving weather will leave corn stuck in the same choppy trading pattern it’s been in since March. Given current weather forecasts and the ability of farmers to plant massive acreage quickly, the outlook leans towards choppy trading going forward.