Corn Rises as Production Outlook Dips

By Kirk Maltais

-- Corn for December delivery rose 3.5% to $3.38 3/4 a bushel on the Chicago Board of Trade Thursday as new "prevented planting" data and uncertainty about recent wind storm damage have traders reconsidering their expectations for the 2020 harvest.

-- Soybeans for November delivery rose 1.9% to $8.99 1/2 a bushel.

-- Wheat for September delivery rose 1.1% to $4.96 3/4 a bushel.

HIGHLIGHTS

New Data: Confirmation by the USDA as to how many acres U.S. farmers declared as unplanted under the prevent plant program lifted corn futures Thursday. According to the FSA, 8.99 million acres were enrolled in the prevent plant option with 5.37 million acres being corn and 1.22 million acres being soybeans.

For traders, this confirms the USDA's June WASDE that showed a 5 million-acre decrease in planting expectations, giving hope that the 2020 crop won't be as burdensome as previously expected.

"Both [corn and soybeans] were lower than expected but keep in mind that due to Covid it is likely not all the data was collected," said Craig Turner of Daniels Trading.

Busy Buyers: China again purchased more U.S. soybean exports Thursday, making it the sixth day in a row that the USDA has reported a sale of 100,000 metric tons or more to the country. The USDA said 197,000 tons of soybeans were sold to China for delivery in the 2020-21 marketing year, making it over 1.75 million tons sold to China in six days.

On top of that, soybean export sales topping 3.4 million metric tons for both 2019-20 and 2020-21 marketing years included 2.13 million tons of sales to China, the USDA said in its weekly export sales report, giving grains traders optimism that strong Chinese business is here to stay.

INSIGHTS

Thinking It Over: Wednesday's WASDE report may have shown a record-size yield for the U.S. corn crop, but grains traders are reconsidering their assumptions about how large the 2020 corn harvest will actually be.

"Our production thoughts are going backwards at this point," said Ted Seifried of Zaner, highlighting changes to weather forecasts for the next few weeks as well as a wind storm that hit the Midwest as reasons that projections for a record-size corn crop may shrink going forward. After corn futures shed 6% in July, traders may see an opportunity to get futures cheap, although the fundamental supply-demand story for corn is unlikely to radically change, Mr. Seifried said.

Money Moves: Managed money investors holding short positions in corn futures appear to be cutting their exposure, said Marex Spectron. The firm estimates that traders have reduced the net short on corn to 123,000 contracts as of Aug. 11, down from 150,000 contracts on Aug. 4. The CFTC is scheduled to release its next Commitments of Traders report on Friday, but in its last report it showed the net short position in corn among large fund traders at roughly 194,000 contracts as of Aug. 4.

Storm Pattern: Weather patterns developing in the Atlantic Ocean will have a strong effect on the weather for crops in the U.S. Corn Belt, said Terry Reilly of Futures International.

"Weather in North America over the next few weeks will be largely determined by the tropics and the interaction of frequent tropical cyclones and the North America high pressure ridge," said Mr. Reilly. "An active tropical pattern will be firing up in another week to no more than 10 days ... the subtropical jet stream will bring frequent storms toward the southeastern United States and there will often be a trough of low pressure over the southeastern U.S. that will limit moisture from flowing into the Midwest helping to reduce rainfall."

AHEAD:

-- The CFTC is scheduled to release its weekly commitments of traders report at 3:30 p.m. EDT Friday.

-- The USDA is due to release its weekly grain export inspections data at 11 a.m. EDT Monday.

-- The USDA is scheduled to release its weekly crop progress report for the 2020-21 crop at 4 p.m. EDT Monday.

Write to Kirk Maltais at [e-mail]