Chicago Board of Trade Market News
Outlook: About all one can say for corn futures is that they’re still there, dutifully providing price discovery and risk management options. Unfortunately, there just doesn’t seem to be much risk to manage. Trading volumes have been very light with little fundamental news to encourage position taking. Traders appear to be waiting for better harvest yield information before making judgements on corn’s supply and demand situation.
The U.S. corn harvest is off to a slow start. As of Monday’s Crop Progress report, USDA said 17 percent of the nation’s corn had been harvested, behind both last year and the five-year average (23 percent). Farmers were hoping to achieve better harvest progress but last weekend’s rains limited their ability to enter fields. Traders are expecting to see a sizeable jump in progress with next week’s report but so far haven’t put any risk premium in the market in case the jump isn’t realized.
USDA’s Thursday Export Sales report showed better than expected sales (the trade’s average guess was between 0.5-0.7 MMT) with 0.814 MMT sold. Exports of 0.966 MMT were better than expected as well but still leave YTD exports 41 percent behind last year. Exports will likely be slow this week as China is celebrating a week-long national holiday. U.S. exports look to be stifled in the near term while Brazil has the competitive advantage. However, the tides typically turn and favor U.S.-origin corn during the fall. With the weather issues in Brazil right now, that turning point may come sooner rather than later.
Going forward, December corn futures are unlikely to make any sudden movements until the October WASDE is released next Thursday. The contract is near its lifetime low which won’t be tested without strong fundamental reasoning. However, slow exports and large supplies will keep the contract from gaining any significant upward momentum. The December/March and March/May futures contract spreads show a bearish carry in the market and that sentiment is likely to prevail going forward.