Chicago Board of Trade Market News
Outlook: After the release of bearish USDA data and a sharp sell-off last week, the December corn contract has spent this past week within a narrow trading range while working slightly higher. Unfortunately, this type of price action is not indicative of a rebound or even a bottom formation. Rather, such price action is normally a temporary rebound before recent lows are again retested. End-users of feed grains who perceive such developments can use the temporary rebound as a beneficial lull in time to contact clientele and devise purchasing strategies in case the anticipated setback in prices should materialize. Obviously nothing is lost if that event does not materialize, but more favorable pricing and stronger customer relations are likely the result if devised strategies are correct.
Feed grain producers are seldom excited to observe a setback in the price of corn contracts, but when that event occurs it may be possible for them to negotiate better basis contracts for the future. That could be advantageous if prices work higher the following season. That event is eventually anticipated to happen, but there could momentarily be still lower price levels for the nearby corn contract because there are still some speculators who need to reduce their long positions. As well, the global corn export market is expected to be competitive during the fourth quarter of calendar year 2015 while demand is slow due to abundant supplies and the current reluctance of end-users to build stocks. Longer-term, the outlook is that feed grain prices in the second half of next year will average higher than the fourth quarter of 2015.