Chicago Board of Trade Market News
Outlook: In a recent DTN survey of subscribers, 53 precent predicted that corn yields will decline in USDA’s September 11, 2015 reports. While that estimate is a majority, it is not a strong majority. As well, the recent weekly crop condition reports for U.S. corn are remaining stable during a period of the growing season when they normally decline. There is also no established precedence for declining average U.S. corn yields this season because of the increase to 168.8 bushels per acre (bu.) in USDA’s August data, which was up from the July estimate of 166.8 bu. The point being, the composite of preceding factors imply that any decrease of average U.S. corn yields within USDA’s September data is unlikely to be large enough to shock the market sufficiently to fuel a prolonged rally.
The 2015/16 crop season will begin on September 1, 2015. The outlook is that increasing demand, rather than a supply shock, will be the necessary catalyst to eventually propel prices to higher levels. Increasing demand normally develops over longer time periods than does a supply shock. Demand normally starts to steadily increase in a period when there is mounting concern about future production. It may not be until the second quarter of calendar year 2016 before uncertainty about South American weather and U.S. planting intentions stimulate global end-users to extend their coverage aggressively enough to cause the trend of corn prices to shift in an upward trajectory.