Market Perspectives – November 7, 2019

Chicago Board of Trade Market News

Outlook: December corn futures are 14 cents (3.6 percent) lower this week as the advancing corn harvest is accelerating cash sales and pressuring basis levels. Traders are also positioning for the November WASDE report, to be released Friday November 8th, and expectations for ample ending stocks are pressuring the CBOT.

Industry surveys show that most analysts expect USDA’s yield estimate for the 2019 corn crop to be near 10.506 MT/ha (167.3 bushels/acre), down slightly from the agency’s October estimate. With analysts expecting harvested area to be near 32.902 million hectares (81.3 million acres), 2019/20 U.S. production is anticipated to be 345.51 MMT (13.602 billion bushels). Assuming demand-side factors are mostly unchanged, the average 2019/20 ending stocks estimate is 45.697 MMT (1.799 billion bushels) – down 3.302 MMT (130 million bushels) from USDA’s October forecast.

The weekly Export Sales report showed net sales of 487,900 MT and exports of 317,900 MT, the latter figure reflecting a 36 percent decrease from the prior week. YTD exports are down 63 percent at 3.939 MMT while YTD bookings (exports plus unshipped sales) are down 47 percent at 11.893 MMT. Other feed grain exports are faring better, however, with barley and sorghum exports increasing from the prior week. YTD barley bookings are up 5 percent while YTD sorghum bookings reflect a 143 percent increase.

Cash corn prices are lower this week with the average price across the U.S. reaching $143.09/MT. Basis has been slightly firmer despite the slow move lower in futures prices, averaging 12 cents under December futures this week. Barge CIF NOLA and FOB NOLA values are down slightly from last week with FOB offers reaching $170.25/MT.

USDA noted on Monday that 96 percent of the U.S. corn crop is mature, essentially on par with the average maturity level for this time of year, while 52 percent of fields had been harvested. That harvested figure is 23 percent below the average pace and reflects the late-planting of this year’s crop. Farmers have largely concluded the soybean harvest and are turning their attention to corn this week. The weather forecast is cold but dry, meaning farmers should make good progress in the next two weeks.

From a technical standpoint, December corn is under pressure from pre-WASDE positioning and lower cash prices. The market has sustained two closes below the 50-day MA but Thursday’s trading found strong commercial pricing interest as prices approached $3.75/bushel. Funds are slightly short corn futures with a general lack of bullish or bearish news reducing incentives to build or exit that position. Momentum indicators largely suggest the market is in a sideways trading pattern, but the November WASDE report may change that.