Corn prices in the DEC18 contract battle to keep their head above $3.50 per bushel. New lows were posted last Thursday at $3.48^6. The bulls are hoping our historical tendency to bottom out sometime between mid-August to early-October will come sooner rather than later.
The USDA's most recent record yield forecast at 181.3 bushels per acre, adding another +241 million bushels to production, is certainly not helping things and hard for the bulls to digest. Especially when you throw on talk of U.S. producers increasing acreage next year and ending stocks currently at a comfortable +1.7 billion bushels. Demand remains extremely strong, but lack of a wide-spread weather story and no real global growth headlines or feeling that the funds want to be long, works to limit bullish momentum.
There's only so much heavy lifting we can place on "demand", eventually we have to have help from weather to create some talk of supply hiccups, and some strength from the larger macro bullish funds. We just don't have those headlines right now. In fact, the corn market feels somewhat lost to me and searching for direction. Unfortunately, as it drifts, I continue to see it glancing over at the soybean market. The lower soybeans prices travel, I suspect the lower corn prices drift.
Bulls argue that world corn stocks are down more than -20% compared to last year, but prices aren't reflecting the lower supply. Again, in today's trading world we need more than just demand. We need a global growth story and reason for more funds to be interested in seeing macro headlines from a bullish perspective.
We are still waiting to hear official headlines form Washington regarding the approval of E15 year round. While it is certainly a positive domestic headline for corn used for ethanol. I don't see it as something that is going to draw decidedly more bullish interest from the funds or shift their current outright bearish position. I just think the underlying landscape of trade uncertainty has created a bearish mindset or tone to the market.
Ink a trade deal with Canada, China and the European Union and I suspect the bearish clouds will start to dissipate, the low in the market will be established and corn prices will start ratcheting themselves higher. As producers, we have to stay patient, plan for a continued drift sideways to lower and perhaps a widening basis through harvest. Washington and South American weather are the wild-cards moving forward.
The opinions of the author are not necessarily those of Corn+Soybean Digest or Farm Progress.