Chicago Board of Trade Market News
Outlook: December corn futures have done little since last Thursday’s 12-cent gain, staying rangebound this week. There has been little fundamental news to trade on and the market is waiting for USDA’s revised yield and production figures next week. Some bullish news is developing from the developmental delays in the U.S. crop and higher ethanol production, but these are, so far, insufficient to usher in a CBOT buying spree.
USDA’s crop progress report highlighted corn’s slow development. This week, 60 percent of the crop is dented versus 68 percent for the 5-year average and 12 percent was categorized as “mature” versus 18 percent last year. The crop’s good/excellent rating remains well below last year though condition ratings are less important this time of year than is the development pace. Fortunately, the weather forecast does not include freezing weather for the next several weeks, which will help the crop finish.
This week’s USDA Export Sales report is delayed by the Labor Day holiday and will be released Friday morning. Traders expect the report to show total marketing year exports that exceed USDA’s projections, though not by much. Should the final report of the 2016/17 marketing year include figures that exceed USDA’s 2.225-billion-bushel export forecast, it would technically be bullish for the market. However, given the size of corn carry-in for the 2017/18 marketing year (2.37 billion bushels) and expected production upward of 14 billion bushels, it will be hard for the market to respond bullishly.
From a technical standpoint, December corn futures are in a medium-term downtrend. Traders, however, are debating whether the contract has reached its seasonal low. If so, it would be about a month ahead of schedule but equal to last year. Funds have been aggressive in liquidating their weather-market long positions and are thought to hold a basically neutral position. As such, the selling pressure observed during the last half of August should be gone, leaving opportunities for higher prices. However, the market faces headwinds beyond fund selling, including large carry-in stocks, big production, and Brazilian prices that are under-cutting U.S. exports. So, while December corn may have scored its seasonal low, a sharp rebound higher is unlikely.