Chicago Board of Trade Market News
Outlook: Chicago corn futures are described as “featureless” and trading is characterized as unnecessary, and yet March corn was able to gain 7 cents during the week of January 18, 2016 and is holding above the 50-day moving average of $3.67/bushel. One bullish piece is the dry weather in parts of Argentina’s corn production area. Another is the fact that sorghum imports by China this past November were not as shabby as feared. Note that sorghum remains priced lower than corn and has multiple points of demand. Still, there are ample fundamentals going in the other direction.
For example, Ukraine and Argentina continue to duke it out in the feed wheat market. Argentina typically sells high quality wheat to Brazil but with a large volume of lower quality product, it has made rare sales to South Korea and Vietnam. In China, government policy has improved corn utilization for starch, but that hasn’t translated into any improvement in downstream demand. As a result, surplus inventories have increased. Even the upcoming Chinese New Year does not seem to improve the demand outlook.
However, it was the selloff in soybeans that ultimately dragged corn down in the futures market.
Back in the U.S., none of this seems to stymie corn farmers who are said to be planning on more acres planted this spring despite the low prices. They are encouraged by the above average yields of the past two years, and an overall global supply situation that is getting nudged lower.