Chicago Board of Trade Market News
Outlook: USDA updated their world supply and demand estimates on Monday and the data was more bullish for corn than pre-report estimates. U.S. corn ending stocks for the current 2013/14 season declined from the January estimate of 1.631 billion bushels down to 1.481 billion bushels. The average taken from pre-report estimates figured that U.S. corn ending stocks would decline to 1.606 billion bushels. This decline happened primarily because USDA increased their estimate for U.S. corn exports by 150 million bushels. This increase in U.S. corn exports is forecast to occur because Argentina’s corn exports were reduced by 1 MMT, due to poor weather in January, and because of increased global feed use from nations such as Mexico, South Korea, Canada, the EU and Egypt. The final result is that the stocks-to-use ratio for U.S. corn declined from 12.4 percent to 11.1 percent.
USDA reduced global corn ending stocks to 157.3 MMT and this resulted in a modest decline in the global corn stocks-to-use ratio to 16.7 percent. Global supplies are sufficient enough that there is presently no cause for a sudden sharp rally in corn – so long as no additional threat evolves to challenge future global feed grain production. There was already a steady increase in futures contracts as speculators reduced their large short position prior to the release of Monday’s report. As a result, corn futures now seem stuck in a sideways trading pattern and are likely to remain there until a new catalyst emerges.
In the near-term, the market’s attention will focus on the U.S. export sales pace for corn, South American weather, and the condition of U.S. winter wheat as it comes out of dormancy. Any of these factors could have a limited impact on corn contract prices. Shortly thereafter, the market’s attention will further encompass weather developments in the U.S. Corn Belt and the results of USDA’s Prospective Plantings and Grain Stocks report, which will be published on March 28th. These latter factors could have a larger impact on corn contract prices.