Market Perspectives – September 20, 2018

Chicago Board of Trade Market News

Outlook: December corn futures are up 2 cents (0.6 percent) this week as end users aggressively lock in supplies. Additional support has come from speculative profit taking and short covering amid the sharp rally in soybean futures. Heavy rains forecast for parts of the Midwest are creating some concerns about harvest progress, prompting the market to add a small risk premium.

USDA’s weekly Export Sales report was bullish with 1.383 MMT of net sales and 1.077 MMT of exports. The latter was sufficient to keep YTD exports up 27 percent while YTD bookings (unshipped sales plus exports) are up 50 percent from last year. U.S. corn is among the cheapest feed grain globally, and the dollar’s recent drop is helping international buyers book U.S. supplies.

The U.S. crop is doing well but is coming under duress from threatening rains. Monday, USDA said 54 percent of the crop was mature, up from the five-year average of 36 percent, and 9 percent was harvested (up from 6 percent on average). USDA said 68 percent of the crop is still in good/excellent condition. Looking forward, however, the Midwest is expected to receive substantial rains this week, especially Minnesota, Wisconsin, and northern Iowa. The rains could cause some crop damage along with delaying the harvest.

December futures seem to be attempting to post a seasonal low, with a new contract low reached on 18 September and a sharp rally thereafter. Funds are reported to be big buyers on the recent rally, including new position taking along with short covering. Still, the cash market remains weak and trending lower, which may undermine support for the futures rally. However, with rain concerns and bullish exports, speculative money is likely to remain cautious about pushing prices lower, and the market could see more price appreciation in the near-term.