Chicago Board of Trade Market News
Outlook: After five days of trading, December corn futures are down 3 cents (0.44 percent) as the market continues to trade sideways between support at $6.71 and resistance at $7.06/bushel. The fact that slow exports and challenging Mississippi River conditions are not causing a drift lower is testament to the continued strong demand from ethanol and livestock feeding. Next week’s November 9 USDA WASDE report could add volatility as analysts are split on whether yields and overall production will be cut or raised for the current harvest. Thus far, the current crop harvest has not placed much pressure on the market.
As of Sunday, USDA’s Crop Progress report indicates the corn crop is 76 percent harvested, which is above both last year’s pace and the 5-year average. This late in the season, rain or snow could slow removing what is left but no significant delays are expected.
At 422,288 MT, weekly export inspections as of October 27 were down 11 percent from a week earlier and are off 23 percent year to date. Exports need to be 44.5 million bushels each week to hit USDA’s forecast but were only 16.6 million bushels last week.
Ethanol demand remains strong with the EIA reporting a third consecutive week of production exceeding 1 million barrels a day. The industry continues to watch natural gas prices and any impacts on demand due to the Fed’s interest rate hikes. Meanwhile, feed demand is keeping basis levels in the interior at some of the highest levels in 10 years. However, the price risk remains to downside due to sluggish exports, slowed transport to the Gulf, and increased competition. The river situation is actually causing some abnormal basis levels as they are weaker closer to the river and stronger when near feed and ethanol plants.
Russia gave the market a bit of a wild ride this week, first announcing it would suspend the Black Sea grain corridor agreement and then reversing that position on Wednesday. It is still not clear what happens when the current agreement expires on November 19, though UN officials express optimism that it will continue.
