Chicago Board of Trade Market News
Outlook: The delayed U.S. corn harvest has commensurately delayed hedge pressure in the market, leaving traders, farmers, and agribusinesses largely directionless in anticipating prices. There is a growing feeling that harvest-time lows should have already been established and that prices should begin a slow grind higher soon. However, with only 38 percent of U.S. corn harvested (and, presumably, a similarly low number hedged), there is also a growing expectation that farmer hedge selling will pick up soon and pressure prices further. Consequently, December corn futures have been trading sideways and are likely to continue this trendless trend going forward.
U.S. corn exports have picked up in recent weeks but remain well behind last year’s pace. U.S. FOB Gulf corn is becoming increasingly competitive against Brazil, carrying a 6-cent premium this week versus 10 cents last week – which helped sales this week. The USDA’s Export Sales report showed 50.7 million bushels of net sales and 23.8 million bushels of exports, a relatively neutral combination but one that also exceeded traders’ expectations. Export shipments were below the weekly pace needed (45.3 million bushels) to meet USDA’s projection, and currently stand at 10 percent of USDA’s total forecast. However, shipments this week exceed what traders thought would be exported, a sign that international markets may be changing.
Corn harvest progress remains slow across the U.S. as farmers focus on collecting soybeans first. USDA’s weekly Crop Progress report showed over 90 percent of corn is rated “Mature”, which is on-average for this time of year, but only 38 percent had been harvested. Typically, by this point in October over half the crop is harvested. With the crop mature, traders are likely to ignore the harvest progress statistics, especially given generally good weather forecasts for the coming week.
The technical perspective on December corn remains murky and decidedly range-bound. However, it is relevant to note that while managed money funds are net short, their position isn’t as big as in this same time during previous years. Therefore, there is possibility for both a down-side breakout or an upside rally, should something spark the market. With harvest pressure likely increasing and concluding in the next few weeks, the market may yet see additional pressure. Additionally, the dollar index appears to be forming a bullish chart formation, which could be damaging for U.S. corn exports. However, U.S. corn is gaining competitiveness internationally and growing weather issues in South America could continue to support the market.