$4.360 up 2 cents.
From Inside Futures:
Last month I wrote how I felt corn prices were headed for a long drawn out slide to the $3.50 level. Following the Jan-2014 USDA production report it appears this price action has been put on hold, at least temporarily. As corn prices were on a rapid decline towards the $4.00 level in early January, the USDA report did provide a quick jolt to the upside, enabling the market to consolidate around the $4.25 level. Looking forward however, I feel that in the big picture not a whole lot has changed, despite the short-lived support generated from the January report.
Corn Futures - Weekly Continuation
Chart by APEX For instance, despite the fact that corn production was cut 64 million bushels, to 13.925 billion, roughly 140 million below expectations, it still represents a record large crop and up 815 million bushels from the previous record. Despite the ending stocks forecast at 1.631 billion bushels, which was 230 million bushels below expectations, they are still twice what they were last year and the highest in four years. Despite global corn stocks declining by two million metric tons to just over 160 mmt, they are still the highest in thirteen years. Given the current usage trends, it's likely the US ending stocks forecast will not change a great deal. At the moment, US corn export commitments are up 136% from year ago, vs. the USDA forecast of up 98%, however shipments are up only 80% from a year ago.
In the marketing year to date I'd argue we are very near the pace needed to reach the current USDA forecast of 5.0 billion bushels used in the production of ethanol. In feed usage there are many in the trade that are skeptical of the USDA feed usage forecast of 5.30 billion bushels, the highest figure in 6 years. This due to the fact that cattle inventories on feed have been slow to build following the devastating drought in 2012. Cattle on feed as of the January 1st were just under 10.6 million head, down 5.4% from a year ago. And finally, in looking at the role of the speculative traders, many have been expecting a short covering rally to lift prices out of this sideways channel. In reality the large speculators net position, while still short, is much less burdensome than it was late last year. In early Nov-2014 the money managers' short position was a record at just over 180,000 contracts. As of the most recent CFTC report they were net short just under 60,000 contracts, two thirds smaller than just over two months ago....MORE
