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Corn Market Eyes USDA Report

Weekly exports were disappointing this morning coming in at 101K. Initially this would look very disappointing but we need to keep in mind this was the week of Christmas which makes the analyst expectations of 600K - 1000K seem very much out of line. Trade didn't react to this number at all today knowing that it was during a major holiday week. For that reason the March corn spent most of the day right around the middle of the road price level which for March is 350 1/2.

What might have been accomplished this week on an otherwise sideways week is a bit of a turn away from a pre-determined bearish mindset leading into next week's report. We won't know for sure if trade is going to spend next week with a more neutral mindset until seeing how trade goes next week but there was certainly much less yield raising talk this week compared to what we have heard in past weeks. Looking back to 1997 the corn has a track record of seeing yield raised 9 times while lowered 11 times.
Looking a bit shorter term, we notice that yield has been lowered the last 4 years in a row. If there is any year to compare to previous reports we would have to think it would be the last two years where USDA lowered production just slightly. Look for most of next week to turn all focus towards the upcoming crop report even if that means trade moves sideways most of the week. Outside market influence or any 8 AM sales should take a distant 2nd importance to looking ahead to next week's report.

Bulls
    •    Bulls will hope that pre traders will start looking for either a steady or lower yield to go with improved demand numbers
    •    This week's demand reports were not positive but bulls should not be concerned unless next week's is equally slow

Bears
    •    Bears will clearly be looking for next week's ethanol and export reports to continue a slow pace
    •    We will see if trade will start pre selling next week expecting a yield increase to help to offset an expected stronger demand

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Rich Nelson
Allendale Inc. 
815-578-6161
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