The corn market's seasonal tendencies fail to provide a rationale for noncommercial, or investor, buying in the March through early-August period, as indicated on DTN's Five-Year Seasonal Index chart.
As seen on the attached chart, the five-year seasonal index (blue line) shows that prices tend to trend lower from an early March high to a low reached in early August. This comes in addition to the already bearish fundamental news, with the average of pre-report estimates in the U.S. expecting that both U.S. and global ending stocks for 2015/16 will be increased from the volumes estimated in March in Tuesday's USDA report. The current domestic pre-report average would indicate that 1.849 billion bushels will be carried out of the United States this crop year, the highest level since 2005/06, while U.S. farmers are expected to respond by planting more acres in 2015.
Over the past five years (2011 through 2015), the loss in price averaged 55 1/4 cents per bushels in early March through the end of the first week in August, as calculated on the continuous chart. Prices weakened in this period in all but one year, which was seen in 2012. A move of this magnitude would see the test of $3/bu before the end of the first week in August while reaching the lowest levels seen since September 2009.
Prior to a test of this area, support will first be tested at monthly lows ranging from $3.46 1/2 to $3.48 1/4 cents on the continuous chart, with further monthly lows to be tested in the $3.18 1/4 to $3.19 1/2/bu range.
Cliff Jamieson can be reached at firstname.lastname@example.org
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