Chicago Board of Trade Market News
Outlook: USDA will publish its June WASDE next Wednesday, June 12, and the next important reports, Acreage and Grains Stocks, will be published on June 28. By that point, extended weather forecasts will start to reach into the primary time period for corn pollination across the U.S. Corn Belt. If there is no major surprise in the USDA reports or weather forecasts, then the inflated spread between old crop and new crop corn prices could become volatile as it compresses.
If historical behavior is any indicator, then reluctance to sell before these important reports may allow the July 2013 contract to test the $6.70-6.90 trading range. Such action also could be supported by market discussions about the potential reduction of 1-2 million corn acres because of late planting, strong domestic corn basis, and talk of dryness in areas such as Ohio and the coastal plain of North Carolina. If such a combination of factors does result in a limited price spike, then that price action would be a gift to anyone still holding old crop corn.
U.S. corn crop conditions have not started off ideally this season, but ratings could improve if plants in the western Corn Belt have warmer temperatures and abundant soil moisture for the next 10 days. Additionally, Argentina has been an aggressive seller of corn, while Brazil has little storage left and is likely to seek an established customer base prior to the harvest of the second corn crop that occurs from mid-June into September. Some of this corn is likely to make its way into the Southeastern United States.
The U.S. Climate Prediction Center recently noted that there is little likelihood for a threatening El Nino weather pattern during this current growing season. These topics can be discussed with more detail in the future, but they are noted at this time to emphasize the point that any near-term spike in corn futures probably is a selling opportunity for the remainder of old crop feed grain stocks.