Chicago Board of Trade Market News
Outlook: This section noted several weeks ago that extension of a trading range seemed the most probable scenario for corn contract prices through year-end, and that appears to be what is happening. Contract prices are now presumably entering the upper quartile of that range which will be extended into the future through year-end.
The fact that the rate of U.S. corn being inspected for export is rather active even though U.S. prices are holding a premium to competitors seems to be confusing for some market participants. However, the total equation cannot be factored without considering logistical costs. Global buyers run the total costs and seem to be finding that the U.S. is competitive for present needs.
In relation to future feed grain needs, the U.S. may also be more competitive than it seems because basis in some regions has not kept up with the recent rebound in nearby corn futures contracts. Conditions may improve as commercial buyers seek to encourage additional selling by U.S. producers so that they can extend future coverage for international clients. Increasing export sales is often a catalyst that fuels additional export sales.
Many U.S. producers seem willing to patiently wait for some improvement in price, and are also seeking to reduce costs by allowing corn to dry as much as possible in the field. This season’s slow harvest rate cannot be entirely attributed to rainy conditions, but rather low prices. As a matter of fact, most producers are very aware that cool and damp weather can increase the prospect of negative issues such as fungus. The resulting outlook is that the U.S. corn harvest this season will continue at a slower-than-normal pace as producers intently monitor conditions.