Chicago Board of Trade Market News
Outlook: Last week this section explained why the short-term outlook was for corn contracts to selloff into the first of August, and that expected event appears to have largely happened. However, it is also prudent to explain that this anticipated decline is not assumed to be the start of a continuous price decline into harvest. Rather, corn contracts are expected to bounce prior to the release of USDA’s August WASDE and Crop Production reports on Wednesday August 12. This expectation is noted to benefit end-users of feed grains by highlighting that the present buying opportunity is not assumed to be prolonged.
The average crop condition for U.S. corn is closer to the average of the past 10 years than it is to last season’s continuously high ratings. Monday’s data did have a subtle increase in U.S. corn’s average crop condition ratings to 52 percent good and 17 percent excellent from the prior-week’s rating of 54 percent good and 15 percent excellent. However, please note that there was no increase in the combined total of 69 percent good-to-excellent ratings but a 2 percent shift in ratings from good-to-excellent. It is normally good to be optimistic, but being realistic is also necessary. There seems to be little-to-no possibility that corn condition ratings will escalate upward to last season’s 76 percent good-to-excellent rating that resulted in yields well above the trend-line. USDA is already giving the benefit of the doubt with their current average U.S. corn yield estimate of 166.8 bu., which is closer to last season’s read yield of 171 bu. than to the prior-year’s yield of 158.1 bu. Actual field data will come into play from August onward. Consequently, the expectation is given for some sort of rebound in the December corn futures contract prior to the release of August data.