Chicago Board of Trade Market News
Outlook: Grain market analysts continue to point at macro or external factors such as currency valuations and the oil market for what is happening to their studied products, but the bottom line is the market continues to largely trade sideways. The fall in the value of the dollar is providing a floor but it is still unclear whether March corn can break above what has been steady resistance at $3.75/bushel.
There are many conflicting pressures ranging from a possibly improved weather outlook in Brazil and Argentina, to the machinations in the currency markets. Fund managers tanked corn in January but have been selling their short positions of late, acknowledging the fact that the Fed cannot raise interest rates. Without doubt the downward pressure on the dollar will prompt some competitive devaluations to occur elsewhere.
Corn is having to compete with lots of low-cost wheat, which is likely to cause the U.S. corn export pace to slow. The trade will be watching what USDA does with this number in this coming Tuesday’s February WASDE report.
Corn prices are low, which leaves an upside potential as the only alternative. Private forecasters are accommodating with some citing a wet spring and then hot and dry summer denting the crop as the El Nino to La Nina weather pattern takes its toll. Bill Kirk of Weather Trends 360 told a Chicago audience this past week to expect $6-$7 corn this summer. BMI Research was less provocative with a forecast of corn at $4.10/bushel in 2016 based on lower output in North and South America.