Market Perspectives – April 19, 2018

Chicago Board of Trade Market News

Outlook: The outlook for the corn market continues to be one featuring choppy, sideways trading for old-crop futures and a slight trend higher for new-crop. Corn stocks are ample which is dampening upward potential in old-crop prices, as are trade concerns, while the decrease in corn planted area could lift new-crop futures later in the year.

USDA said 3 percent of the corn crop was planted in Monday’s Crop Progress report, slightly behind normal for this time of year. This past weekend’s snow and cold weather across most of the Midwest further sidelined planting activity and has farmers looking for any break in the weather. Fortunately, the current forecast includes a warming trend for much of the key corn-producing states. The crop isn’t “late” yet, but its progress warrants watching.

The EIA’s weekly report showed ethanol production down 2.4 percent from last week and stocks down a similar amount. The production decrease is attributed to seasonal spring maintenance shutdowns and possible cold weather effects as well. Ethanol stocks are now down 7.3 percent from last year as domestic and export demand pull additional product into the pipeline. Notably, Japan announced this week it would allow 95 million gallons of U.S. ethanol to be imported, an important win for the U.S. ethanol industry.

This week’s Export Sales report featured above-needed volumes of corn sales and exports that brought YTD bookings (sales plus exports) to within 2 percent of last year’s value. Net sales in this week’s report reached 1.092 MMT while exports were well above average at 1.594 MMT. YTD corn exports are still down which is holding bearish sentiment over the market. However, with bookings only down slightly, the USDA is unlikely to change its corn export forecast in the May WASDE.

Another notable statistic from the Export Sales report is the 70 percent YTD increase in barley exports.

From a technical perspective, May corn looks to head sideways into its expiration and July corn futures will likely continue that same trend. New crop (December) futures have a more bullish lean but need strong fundamentals to challenge their mid-April highs. Funds are still long 380,000 contracts of corn which will keep prices elevated at least until the crop is in the ground.