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257170

USDA Throws Corn Market a Bone

Today’s acreage report came in at 89.996 million compared with the analysts’ average estimate of 91 million and some thinking that trade was actually expecting closer to 92 million. This came as a bit of a bullish surprise to some and to others, this may have been even more surprising. On the quarterly stocks side, trade was expecting 8.534 billion bushels and instead saw 8.616 billion. The stocks number was a bit bearish compared with expectations to help limit what might have been a larger upside move today.

Going forward into next week, we would expect that full attention will move back to acreage as well as weather. Today’s weather maps offered moderate rains in the 10-day. But the Sunday night and Monday morning maps will determine the direction of trade focus, turning much more to U.S. conditions. Another factor adding light support today would be end-of-quarter buying by the funds. Given that we know they were short coming into today, it would make sense to expect at least moderate buying going into the end of the quarter so they can report gains on exited positions. To start next week, funds may choose to resell some of these positions again, but longer term direction will still be determined by weather forecast and expected planting pace.

Bulls

  • Acreage came in 1 million less than analysts’ estimates and 2 million under what some recent sellers may have expected.
  • Bulls will be looking for any amount of rain in the forecast to start offering support on very early delayed planting thoughts.
  • It would be most supportive for this market to add on some additional fund short covering beyond the small amount seen today.
  • Next week might be able to react more to strong demand reports with the acreage report being done.

Bears

  • Quarterly stocks were 82 million bushels higher than expected to help offer light resistance today.
  • Bears will be looking for funds to resume selling early next week to start a new trend of a grind lower again.
  • Bears should also look for clear weather in the forecasts to not only suggest planting on time but also stealing acres right back from beans.

Rich Nelson | Allendale Inc. | 815-578-6161

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