Chicago Board of Trade Market News
Outlook: Percentage wise, since the spring highs corn futures have fallen slightly more than soybean futures. Yet, in the U.S., it was soybeans that had the enormous year-over-year increase in acreage, not corn. The recent aggressive decline in corn happened when a large group of speculative traders, who were holding unprofitable long positions in corn contracts, decided to simultaneously exit because there was no bullish surprise in recent USDA data or weather going into pollination.
U.S. corn pollination is approximately 50 percent complete and weather conditions have been consistently favorable. The favorable weather has produced consistently high crop ratings for the U.S., which in turn implies that average yields will be high. USDA is forecasting that average U.S. corn yields will be 165.3 bushels per acre. Continuation of pristine growing conditions could result in final yields that even surpass 170 bushels per acre. However, weather forecasts for next week in the western Corn Belt imply there could be some heat.
After a substantial sell-off, corn contracts seem to have once again plateaued into a trading range as commercial buying increases. The majority of commercial end-users are interested in locking in favorable returns rather than attempting to purchase the absolute low. They will gladly buy any remaining positions that long speculators want to exit at current price levels. Speculators know this, but they are not thrilled about the offer. Commercials know that the long speculators will eventually need to exit and that there is presently no bullish news to bounce prices higher. So, the outlook is that corn contracts are momentarily in a horizontal trading range.