Chicago Board of Trade Market News
Outlook: Futures tend to close higher ahead of the Thanksgiving holiday, and that is what they did last Wednesday. The big news this week was the U.S. Environmental Protection Agency’s (EPA) announcement of ethanol blending requirements for 2014-2016. The increase in ethanol use above the levels proposed last May will have to be factored into next week’s (December 9, 2015) USDA WASDE report. Some ambitious analysts predict that increased ethanol production will push corn disappearance by an additional 3.8-5.0 MMT. One analyst notes that if China is ignored, the world’s corn carryout is actually much smaller than characterized.
Brazil’s corn exports have been robust but they are now slowing and, despite the relative value of the dollar, the U.S. is now the world’s lowest-priced corn supplier. Weekly corn export sales have averaged over 2 MMT, blowing the top off of expectations. Imagine what they would be if not hindered by a very strong dollar.
Teucrium Trading LLC says that corn prices tend to bottom out in the last four months of the calendar year, with December exhibiting the largest number of price bottoms over the past 26 years.
Focused on the bear market as if it is guaranteed, the non-commercials have bunkered into huge short positions. Given their aversion to even short-term losses, it will not take too much adverse news (i.e. weather) for there to be a strong reversal in the market. In fact, some short covering before the end of the year seems likely.