Chicago Board of Trade Market News
Outlook: The prospect that corn prices would move higher into the first week of May and then sell off for several weeks before again receiving support prior to pollination has been discussed in past issues of this outlook section, and events are so far occuring as expected. U.S. feed grain prices are presently feeling downward pressure as factors such as increased South American selling, the release of Chinese stocks and improving planting weather causes larges speculators to reduce their long positions in corn. However, the present price setback should not be construed as a substantial decline into a prolonged sedentary condition.
The selling of South American corn continues to increase, but corn prices in that region are lagging, not leading, the current downward movement of U.S. corn prices. China is releasing reserve stocks of corn into their domestic market, but will continue to be a major buyer of global feed grains in the 2014/15 season. Chinese buyers presumably see the present advantages of U.S. corn prices and logistical costs, and they will discretely reenter the market at some point.
Planting conditions are primarily favorable across the globe’s Northern Hemphere. Currently, there is some prospect that corn acreage could be somewhat constrained in the northwest portion of the U.S. Corn Belt, but any acreage reduction may be offset by increased yields that result from favorable weather across the corn celt during pollination, slightly wetter and milder, due to the development of El Nino. However – the majority of global end-users also recognize that the prospects of El Nino are not advantageous for feed grain production in other regions of the world. The long-term outlook is that regardless of U.S. corn production prospects, global feed grain prices are likely to remain volatile for the next 18-24 months.