Chicago Board of Trade Market News
Outlook: The outlook for limited downside in current corn prices was noted in this section last week because developing market factors seemed to uniformly imply that was the most probable outcome. Probabilities proved to be correct. In relation to changing market conditions, it is interesting how the market’s general attitudes can seem to uniformly shift in such a consolidated amount of time. There is suddenly more market discussion about the fact that ethanol producer margins are still rather favorable and increasing ethanol stocks can increasingly be exported if they become burdensome. There is also increased discussion about the approach of USDA’s Acreage and Stocks report on June 30. After next week, there will also likely be discussions about developing weather patterns prior to pollination.
An additional factor that could influence the market’s short-term perspective is the increasing evidence that it has probably been premature to call for above-average trend-line yields so early in the planting season, as well as the fact that a weaker U.S. dollar is conducive for U.S. producers to receive better prices. Please note that it would be incorrect to interpret the preceding combination of factors to mean that the absolute low has been established for the present season because the prospects are good that any production of trend yields or above will result in the prior lows of the December 2014 contract being retested. However, the absolute downside in 2014/15 corn prices is unlikely to be as deep or as prolonged as some forecasters had predicted. In other words, the longer-term outlook is that the 2014/15 season is unlikely to see a prolonged period of sub-$4.25 per bushel corn pricing.