Market Perspectives – June 27, 2019

Chicago Board of Trade Market News

Outlook: December corn futures are 2 ¼ cents (0.5) percent lower this week as traders took profits near contract highs and positioned for Friday’s USDA reports. The June Acreage and Stocks reports will be more highly watched than usual as they will offer the first assessment of how much acreage was lost due to wet planting conditions this spring. Some analysts have noted, however, that the USDA will likely follow up with another report, since a large number of acres were planted/entered prevented planting programs after USDA conducted its latest survey.

USDA’s latest Export Sales report featured 294.9 KMT of net sales and 696.4 KMT of exports. The export figure was up 9 percent from the prior week and bring YTD exports to 42.6 MMT, a 2 percent decrease from the prior year. YTD bookings stand at 48.7 MMT, down 15 percent. Other Export Sales highlights include 109 KMT of sorghum exports and 1,000 MT of barley exports. Barley bookings (unshipped sales plus exports) are up 4 percent YTD.

Cash corn prices are rising across the U.S. as old crop supplies tighten and production prospects for new crop (2019/20) corn are lowered. Prices in the Eastern Corn Belt are especially high, with at least one ethanol plant recently bidding $196.84/MT ($5/bushel). The U.S. average cash price is $168.30/MT ($4.28/bushel), up 1 percent from last week and up 32 percent from this time last year.

Recent heavy rains across the Midwest have made river navigation more difficult, which has pushed CIF NOLA prices higher. The latest quotes have CIF NOLA values at $201/MT, in line with last week but up 26 percent versus last June. FOB Gulf values are down slightly from last week at $199.50/MT but are up 19 percent year-over-year.

On Monday, USDA said 96 percent of the U.S. corn crop was planted and 89 percent emerged, both slightly behind their five-year average pace. USDA also noted 56 percent of the corn crop was rated good or excellent, slightly lower than the prior week and the five-year average of 73 percent.

From a technical standpoint, December corn has broken below its supportive trendline and has entered a sideways trading pattern. The bottom end of the trading range is defined by the 20-day moving average/psychological support at $4.50/bushel. The upper end is the contract high of $4.73/bushel. Technical indicators matter little ahead of key fundamental reports like Friday’s, however, and how many acres USDA finds planted and how many bushels are in storage will ultimately determine the market’s direction.