The autumn slowdown in U.S. corn exports and spillover losses from the soybean market depressed corn futures moderately Wednesday morning. The losses accelerated soon thereafter, when a Memphis-based consulting company released their updated forecasts for U.S. crop plantings for the 2012-13 crop year. They boosted their estimate of next year’s corn plantings to 99 million acres, thereby implying a huge domestic crop if normal weather conditions hold next year. The resulting drop sparked a nearby futures test of chart support just above the psychologically important $7.00/bushel level. Strong buying seemingly emerged in that area, but the course of recent events makes us wonder if the spring contracts will eventually fill the chart gap created as prices leapt higher around Independence Day. March corn ended the day 13 cents to $7.07/bushel, whereas the December 2013 contract fell just 5 1/2 cents to $6.17 1/2.
Having China cancel previously contracted purchases of 300,000 tonnes of soybeans Tuesday morning obviously did a number on CBOT soybean prices later in the day. And after showing signs of firmness in overnight activity, the decline resumed Wednesday morning. The downward momentum was apparently quite substantial, since news that a Memphis-based consulting company had lowered its forecast of 2013 U.S. soybean acreage by about 1.1 million acres did little to support the market. CBOT traders seemingly concentrated on the fact that the private forecast would still set a record for domestic soy plantings. January beans essentially duplicated the preceding drop by diving 28 cents to $14.38/bushel, while January soyoil fell 0.67 to 48.50 cents/pound and January meal slumped an additional $8.4 to $437.2/ton.
Tuesday night talk that Egypt would enter the international wheat markets as a major buyer was borne out by midmorning. The fact that they bought 180,000 tonnes of U.S. soft red winter wheat, as well as news of a large private sale to the big African nation, sent American wheat futures sharply higher. However, bulls proved unable to sustain the move. In general, futures markets unable to build upon such positive news are often seen as being vulnerable to a larger reversal. That may be one reason futures continued sliding despite news that a Memphis-based consulting company reduced its estimate of recent winter wheat plantings by approximately 300,000 acres. Traders may also have been anticipating a larger downward revision. One has to wonder if the wheat market is now vulnerable to a resumption of the drop suffered last week. March CBOT wheat settled 5 1/2 cents lower at $8.05 3/4 per bushel, while March KCBT fell 3 cents to $8.58 and March MGE futures dropped 7 cents to $8.95 1/2 per bushel.