Chicago Board of Trade Market News
Outlook: A continued rally of the December corn contract beyond $4.50 per bushel is dependent upon further substantial declines in the average crop condition rating for U.S. corn, and that did not occur. Rather, Monday’s data showed no change in the combined rating of good to excellent from the prior week for either U.S. corn and sorghum. Weather prospects also were forecast to improve in most of the global feed grain producing regions, except France. Such factors reduced prospects for still higher prices and that naturally diminished the incentive of bullish traders to continue buying. In opposite, traders holding short positions were more emboldened by the facts that the United States’ corn crop is poised to go into pollination without any real threatening weather and U.S. farmers need to finish cleaning out their bins. As well, South American traders are increasingly anxious to take advantage of the recent rally in global feed grain prices. Therefore the short-term outlook is that this week’s sell-off in corn contracts could last into the first of August.
Increasing demand could eventually turn corn contract prices higher, but without the development of a more substantial threat to production, that is expected to occur from lower price levels and after bottoming action has become more definitive on chart patterns. Such a demand driven rally occurred twenty years ago in 1995, following the record breaking harvest in 1994. Market conditions in the 2014-2015 time period have similarities.