Chicago Board of Trade Market News
Outlook: This section noted last week that the December corn contract appeared to be entering the upper quartile of a trading range, and that seems to be happening. Multiple traders seemed to perceive a short-term selling opportunity as the December contract traded above $3.76 per bushel.
The recent increase in corn contracts to current price levels could be sufficient to cause a quick increase in the harvest pace; if only cash basis would follow suit. Otherwise, the lackluster harvest pace is likely to continue. A slower harvest pace of a bumper crop increases the threat potential for a sudden adverse weather event, such as an unexpected onslaught of snow, ice, or mud. If such conditions were to develop, then there could be some more upside in corn contracts. Additional upside could widen the trading range that is anticipated to extend itself from the present time period through January.
The short-term outlook is that a rectangular trading range will extend itself into the future, with highs of approximately $3.80 per bushel. However, the development of a weather threat in the U.S. Corn Belt, supported by better than expected demand, could allow the December contract to rally a dollar from it October 1 low of $3.1825 per bushel. Nearby corn contract prices could then evolve into a narrowing funnel pattern that extends through January. One way or another, a rather horizontal trading range is expected to extend itself into 2015. (Knowing the probability of which is more likely is difficult to estimate because weather forecasts are not much good beyond a week out.) Volatility is then anticipated to increase in February as market discussion intensifies regarding the topic of planting intentions.