Bullish sentiment in September corn futures rides high

September corn futures weekly chart. Source: CME Group

September corn futures rallied July 8, closing at $3.84 and 1/2 cents per bushel up 6 and 1/4 cents from the previous close.

The surge was a continuation of a rally that began earlier in the week as traders bought in anticipation of a bullish World Agricultural Supply and Demand Estimates report to be released by the U.S. Department of Agriculture July 9. 

The report on global supply and demand, which details global crop production, usage and resulting ending stocks, is expected to show lower ending stocks for the 2010-11 crop year. 

According to an Allendale analyst who cited a survey by Dow Jones Newswires, traders are expecting the report to show domestic ending stocks of 1.337 billion bushels, down from the June estimate of 1.573 billion. Allendale Inc. is a commodity research advisory firm based in McHenry.

Speculation is active in the corn market following a surprise in the previous Acreage Report released by the USDA on June 30 which showed 87.9 million acres planted for corn, 1.3 million acres below the traders’ earlier estimate of 89.2 million. 

Corn rallied from the mid-range of $3.30 per bushel on June 30, marking a new weekly high above $3.84 on Thursday. Some analysts believe that acres and production figures could be revised lower for Friday’s report. 

Tim Hannagan, senior grains analyst at PFGBEST.com, a financial research and services firm based in Cedar Falls, Iowa., stated in a July 1 report: “Expect the Friday July 9th, U.S.D.A. monthly crop report to show a large drop in the carry over or ending stocks reserve to factor in lower acres and stocks.” 

He explained that farmers are concerned over weather conditions as July this year is slightly hotter and drier than normal. Influence of weather is especially strong in July as corn moves through pollination with yields made or lost for the season. Corn typically needs to get one-third of its total growing cycle moisture at this time of the year in order to achieve normal yields. 

According to the Crop Progress report released by USDA earlier in the week, overall crop condition for the week ended July 4 indicated 71 percent of the crop in the good-to-excellent category, 2 percent lower than 73 percent in the previous week. 

The Commitment of Traders report released by the Commodity Futures Trading Commission also showed money managers accumulating long positions ahead of the report. The report showed 60,713 long positions for the week ended June 29, 5 percent higher than 57,978 contracts reported for the previous week. Furthermore, 96,046 short positions were reported, 3.4 percent lower than 99,466 positions reported for the previous week. 

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