CNS Canada — A larger than expected carryout of U.S. corn supplies has cast a bearish tint over the market.
In the U.S. Department of Agriculture’s monthly supply and demand report, the agency pegged domestic corn stockpiles for 2017-18 at 2.325 billion bushels, which exceeded the June projection of 2.11 billion.
Futures quickly plunged lower, with the most-active December contract falling below major support.
However, as one market watcher put it, the question now is how much stock investors keep putting into the report.
“If the numbers that are printed are legit, then something over US$4 (a bushel for the December contract) probably seems expensive,” said Brian Rydlund, market analyst at CHS Hedging in the Minneapolis-St. Paul area.
The market is an extremely volatile one right now, which is why cooler heads need to prevail.
“We are still in the emotion and the fervor of this heat. We are probably overdoing things a bit,” he said.
When it comes to soybeans, the report was viewed as being more neutral in tone. The agency pegged stockpiles at 460 million bushels in 2018, which was somewhat lower than expected.
“The bean side of things didn’t change much,” said Rydlund. “Carryout was a bit smaller for this year and next year.”
Yields were also left unchanged at 48 bushels an acre. Prospects for a bumper crop are fading as sweltering temperatures in the U.S. Midwest continue to stress the crop.
Rydlund expects participants will soon put the report in their rearview mirror.
“We’re going to go back to weather soon,” he said.
— Dave Sims writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.