Chicago Board of Trade Market News
Outlook: USDA reported that 24 percent of the corn crop is now harvested, slightly below the five-year average for this date, but maturity is above average. It rated 73 percent of the corn crop in good/excellent condition, down 1 percent from a week earlier but 5 percent above the volume rated good/excellent at this time last year.
Average yields coming out of the fields have grown larger as the harvest moves northward into areas previously overly damp; there is a lot of grain in storage but the news this week was bullish. First up was the quarterly stocks report which showed corn on hand on September 1 at 0.5 percent larger than a year earlier, but that was 0.8 percent smaller than the volume expected by the trade. Adding to the fever was corn exports, which were expected to be higher but surprised many by clocking in at 2.6 MMT this past week, which is above the pace needed to hit USDA’s forecast.
The rising volume of exports has added 13.4 percent to the volume being rail shipped versus a comparable period a year ago. This has the effect of pushing rail freight rates higher and thus pressuring interior basis levels lower. Despite abundant feed wheat, it cannot compete in the domestic market with the low prices on corn and sorghum. Sorghum prices should drop some based on exports falling off pace from USDA’s forecast.
A mid-October rally is not unusual and the new resistance level is $3.65/bushel.