Chicago Board of Trade Market News
Outlook:USDA will update their global supply and demand estimates on Monday, February 10. The estimate for U.S. corn exports could be increased and the South American production forecast reduced slightly. Market participants are waiting to see how any changes in data will impact U.S. and global ending stocks of feed grains. This pre-report anticipation is one reason that corn contracts have been able to work higher for the past week. The daily moves have been moderate in size but important in the ability to push through resistance levels.
The majority of market participants are expecting USDA to lower ending stocks for U.S. corn below the most recent January estimate of 1.631 billion bushels for the current 2013/14 season. Estimates range from a high of 1.667 down to a low of 1.574 billion bushels, with an average of 1.606 billion bushels. An estimate below 1.6 billion bushels could further dampen some of the recent bearish mindset. That fact will be particularly true if there is a notable decline in South American corn production estimates as well. In January, USDA estimated that total Brazilian corn production would be 70 MMT and Argentine corn production 25 MMT.
After USDA’s estimates are published on Monday, then attentions will quickly return to the U.S. export sales pace for corn and South American weather, which could improve some next week. Shortly thereafter, thoughts and discussion will turn to the topic of U.S. plantings. USDA will give very preliminary estimates for 2014/15 acreage at their Agricultural Outlook Forum that will occur on February 20-21. Actual survey results of farmer planting intentions will be published by USDA on March 28 in the Prospective Plantings report, which will also be accompanied with the important Grain Stocks report.
As noted last week, a further modest increase in prices could entice farmer selling in order to take care of some tax and lease obligations, but aggressive selling seems unlikely prior to seeing the contents of USDA’s reports and weather forecasts at the end of March. After all, many farmers simply find it difficult to call corn overpriced when the nearby oat contract has recently held a premium.