Market Perspectives – December 5, 2019

Chicago Board of Trade Market News

Outlook: March corn futures are 4.5 cents (1.2 percent) lower this week after last Friday’s post-Thanksgiving rally failed to garner additional support. The futures market has been drifting lower, caught between fund selling, export data, and some 1.5 billion bushels of unharvested corn still standing in the Midwest.

The weekly Export Sales report featured 546,100 MT of 2019/20 corn net sales and exports of 494,800 MT. The weekly export figure put YTD exports at 6.344 MMT, which brought YTD bookings (unshipped sales plus exports) to 14.615 MMT YTD bookings are down 45 percent. Other export sales report highlights include 19,000 MT of sorghum sales following by a marketing-year-high export volume of 139,700 MT. YTD bookings for sorghum are now up 114 percent. Also, 1,000 MT of barley was exported last week, putting YTD bookings up 4 percent.

The U.S. corn harvest is all but finished, with only 11 percent still in fields. Most of that crop is concentrated in the Dakotas, where snowstorms have hampered harvesting efforts.

Cash corn prices are steady this week with the average price across the U.S. reaching $141.12/MT. Futures prices have moved lower while basis has strengthened, rising to -18 cents under March futures versus -22 under last week. Barge CIF NOLA and FOB NOLA values are down from last week with FOB offers reaching $170.75/MT as exporters work to increase the competitiveness of U.S. corn on the export market.

From a technical standpoint, March corn looks range bound between $3.73 and $3.85 with funds holding a net short position but not aggressively adding to it. The 20-day MA has become important technical resistance recently, and a close above that point is likely to create significant short-covering. Commercial buying has been notable on breaks and tightening spreads suggest the cash market will continue to offer support. The market is waiting on final numbers for the 2019/20 U.S. crop (which will likely be updated in both the December and January WASDE reports), as well as watching U.S. export trends. For now, the corn market seems relegated to trade sideways, waiting for fresh supply/demand developments.