Chicago Board of Trade Market News
Outlook: Large speculative traders are normally judged by their end of month returns and price volatility commonly increases during that time period as the tug-of-war intensifies. It is not uncommon for prices to eventually become over-extended in one direction or another during this period. Such a move to the downside appears to have occurred this past week and is presenting feed grain users a favorable buying opportunity.
Prospects of the December corn contract being aggressively sold below $3.80 per bushel prior to the August crop report seems low. Furthermore, the number of traders before forced out of losing long positions will decline and the number of traders wishing to take profits on short positions will increase. Such a composite of factors is expected to cause corn contracts to work higher prior to the release of USDA’s yield estimates for U.S. feed grains on August 12. From August forward, USDA’s average U.S. corn yield estimate of 166.8 bushels per acre will be altered as subjective crop condition reports are overridden by actual field surveys. These two items tend to harmonize rather efficiently by the end of the growing season, but time still remains and so the outlook is that market attention will remain heavily focused on yields in the near-term, before being increasing replaced by discussions about demand.