Market Perspectives March 21, 2014

Chicago Board of Trade Market News

Outlook:Corn contracts spent the week extending a trading range as market participants wait for important USDA reports that will be published on Monday, March 31, which is a little over a week away. However, other factors may have some near-term influence upon grain markets: A primary factor is that Chinese soybean crushers have overbooked beyond their needs and are looking to back out of some purchases. They are looking to do this just as speculators have built a substantially large long position in soybeans. Adding to the potential concerns of these speculators is the fact that there seems to be a growing consensus that USDA’s data could show a noteworthy reduction in U.S. corn planting and a similar increase in soybean acreage. This combination of factors could combine to weigh on the soy complex next week and indirectly influence the price of corn contracts. If such conditions do materialize, then that could be an opportunity for those corn end-users who have not taken advantage of earlier lower prices to extend some protective coverage into next summer.

If U.S. corn planting is around 91 million acres and the average yield ends up being close to trend, then U.S. corn ending stocks for the next 2014/15 season may not be much different than this year. Consequently, traders will not be anxious to sell at present or lower price levels at this point in time. Instead, any future intent to sell corn is more likely to be from higher price levels after there is reduced uncertainty about spring planting conditions and weather going into pollination. After all, it is generally understood throughout the feed grain industry that regardless of planting intentions, rapid planting progress can add to corn acres and delays can do the opposite. The present outlook is that end-users without even short-term coverage have the greatest price risk.