Chicago Board of Trade Market News
Outlook: Trading has been range-bound and somewhat lackluster in the week following the USDA WASDE report (issued September 12) with little outside news to influence prices. Buying strength was noted early in the week as funds pared down short positions and as wet weather in the Midwest increased concerns that some harvest delays may occur. The weather outlook continues to include rain for key parts of the corn belt through the weekend. Commercials have been buyers this week taking advantage of low prices to procure grain.
Wednesday’s Federal Reserve meeting and quarterly press conference was expected to have a more pronounced impact on the corn market this week. The Fed’s decision to leave rates unchanged “for the time being” sent the U.S. dollar index lower which would normally be bullish for corn. The corn market, and agricultural commodities at large, mainly shrugged off the report and worked their way lower. The Fed’s decision to postpone a rate hike eliminates some uncertainty for the grain markets in that rate-hike induced volatility in the U.S. dollar or equities has been delayed at least until December.
U.S. weekly corn export net sales increased over the week prior by 218,000 MT, coming in at 921,900 MT. The weekly sales figure was at the high end of analysts’ expectations and should be viewed as bullish for corn in the near term. Beyond exceeding last week’s sales figure, net sales this week were above the pace (760,000 MT) needed to reach USDA’s projections for the 2016/17 marketing year. Weekly shipments (1.353 MMT) were also above the pace needed for this week’s report (1.074 MMT). The tight Brazilian and South American supplies are keeping U.S. exporters very competitive and expectations are for U.S. corn exports to continue to impress. The quick pace of corn exports so far this marketing year adds importance to the September 30 USDA Grain Stocks report which will provide a much-needed look at how much corn is in the bins.
December corn futures remain under bearish pressure but have likely put in harvest lows. The December contract embarked on a three-day streak of “higher highs” to start this week but retreated Thursday on comparatively light volume. Importantly for bulls, however, Thursday’s close remained above the 10-day moving average (by ½ cent) which keeps some bullish momentum that could be revived by fundamental news. Some technicians are arguing December corn is forming a “head and shoulders” bottom; the head occurring at the August 31 contract low ($3.14 ¾) and the August 19 and September 12 highs of $3.44 ¼ and $3.43 ¼, respectively, forming the shoulders. Whether the December contract has formed a major pricing bottom remains to be seen, but these chart points certainly form the support and resistance points that will guide trading going forward.