Market Perspectives – May 23, 2019

Chicago Board of Trade Market News

Outlook: July corn futures are 6 ½ cents (1.7 percent) higher than last Thursday’s close as traders continue to add a “weather premium” to prices. The corn crop is delayed in its planting and production outlooks are consequently being cut. The near-term trend is higher for corn with prospects of tightening supplies in the driver seat.

On Monday, USDA said that 49 percent of the U.S. corn crop was planted, behind the typical pace. Approximately 19 percent was emerged. The market has been expecting above-average prevent-planting acres this year, with 1-5 million acres having been a common figure. Now, some analysts are estimating a higher prevent-plant figure, which could limit 2019/20 supplies.

USDA’s weekly Export Sales report featured net sales of 442 KMT and weekly exports of 879.3 KMT. The export figure was down 11 percent from the prior week, but YTD exports are still up 6 percent. YTD bookings, however, are down 11 percent, which is slightly below USDA’s anticipated yearly decrease in exports of 6 percent. Other Export Sales highlights include 22.3 KMT of sorghum exports and 800 MT of barley exports. Barley exports are up 85 percent YTD.

Cash corn prices are moving higher across the Midwest in sympathy with futures’ meteoric rise. The U.S.-average corn price is $144.83/MT ($3.68/bushel), up 3 percent from last week but down 3 percent from the prior year. Barge CIF NOLA values are up 5 percent this week due to strained logistics along the Mississippi River while FOB Gulf values have increased 3 percent.

From a technical standpoint, July and December corn futures are following the expected rally from their key reversal two weeks ago. July futures are running into heavy selling pressure near $4.00 as farmers use that point to sell old crop production. December futures have more technical upside, today reaching a new high for this move. Funds have covered an estimated 40-50 percent of their previously massive short position which may mean further short-covering appreciation potential is limited. Looking forward, July futures are slowing down and will likely maintain a choppy, sideways pattern. December futures have far more room to run with the potential acreage and supply reductions ahead.