Chicago Board of Trade Market News
Outlook: Harvest pressure and modest exports this week increased the competitiveness of U.S. corn, with December futures down 9.75 cents from last week (2.6 percent lower). Better weather across the Midwest has accelerated harvest, along with the concurring cash sales. Elsewhere, macroeconomic weakness and a higher U.S. dollar worked to further pressure the markets.
This week’s USDA Export Sales report featured 0.35 MMT of new-crop corn sales and exports of 1.21 MMT. YTD bookings (exports plus unshipped sales) reached 21.438 MMT, up 32 percent from this time last year. U.S. corn remains competitive on the world market, though recent strength in the dollar may complicate sales timing.
After several weeks of cool, rainy weather that delayed harvest, better weather this week has allowed farmers to aggressively collect the crop. On Monday, USDA said 49 percent of the corn crop was harvested (above the five-year average of 47 percent) and 96 percent of the crop was rated mature. Most in the trade expect good harvest to occur this week and expect Monday’s report to show nearly 60 percent of the crop harvested.
In contrast to last week, the better harvest progress has accelerated farmer sales and pressured basis levels somewhat. Still, solid commercial demand is offering underlying support and cash prices (which average $128.73/MT or $3.27/bushel across the U.S.) are well above lows set earlier this fall. Current cash prices are 7 percent higher than this same week last year.
From a technical standpoint, December corn futures have broken below both their short-run trendline as well as moving-average support. Today’s trading saw prices close at $3.61/bushel, below the 40- and 50-day moving averages which had previously offered substantial support. Today’s close was in-line with the 50 percent Fibonacci retracement level, which could offer support for trading going forward. With noncommercial traders liquidating their long positions and harvest ongoing, the market may see additional pressure into next week, which could create excellent buying opportunities for end users.