Chicago Board of Trade Market News
Outlook: USDA’s Prospective Plantings and Grain Stocks reports of March 31 were considered bearish because data within both was larger than expected. The Prospective Planting report estimated U.S. farmers would plant 89.2 million acres of corn this spring. That was a 2 percent reduction from last year but larger than the average estimate of 88.7 million acres. USDA’s quarterly Grain Stocks report estimated that the total amount of corn in the United States on March 1 was 7.74 billion bushels, which is up 11 percent from a year ago. On-farm corn stocks were up 13 percent and off-farm corn stocks up 7 percent. That estimate of corn stocks on hand was larger than the average estimate of 7.63 billion bushels. As noted last week, Chicago futures contracts often react in accordance with how USDA’s data deviates from expectations. As a result, corn futures contacts sold off immediately after USDA’s data was released.
A third year of declining corn acreage and off-farm corn stocks that are up only 7 percent after a year of record production are not bearish factors, but there is always some pent up trading tension that needs to be adjusted immediately after important USDA reports are published. The fact that the data was less bullish than the market’s expectations resulted in the long positions being reduced, which caused a momentary sell-off. However, a sizable pool of traders was waiting to buy corn contracts at lower price levels when the opportunity presented itself. The buying of those traders become increasingly active as the December contract traded through $4.00 per bushel. Such price action continues to support the outlook that substantial price weakness in corn contracts is unlikely prior to June 1.