Are 2024 Chicago Corn Futures Mimicking Those of 2014?

Commodity

Summary:

Industry analysts spent much of 2023 deciding whether new-crop Chicago corn futures were tracking more closely with 2012 or 2013...

Industry analysts spent much of 2023 deciding whether new-crop Chicago corn futures were tracking more closely with 2012 or 2013, though 2013 was certainly the better analog in the end.

December 2024 futures are now inevitably being compared with 2014, which featured some of the sharpest ever mid-year declines.

While prices and some fundamentals look similar, there are also key differences between market conditions in 2014 versus 2024 that may help guide expectations for the coming months.

Prices

Through the first four months of the year, new-crop CBOT December corn futures averaged $4.73 per bushel, nearly identical to the January-April 2014 new-crop average of $4.76, not adjusted for inflation. Both averages are between 15% and 18% lower than in the same periods in the prior years.

But directionally, things look different. December 2024 corn has dropped as much as 11% since the beginning of January, bottoming on Feb. 26. Yearly losses totaled 4% through Wednesday.

New-crop corn was unchanged in January 2014 but jumped nearly 5% in February. December 2014 futures hit their annual high in early April, notching maximum year-to-date gains of 15%. Yearly gains as of May 8 totaled 14% in 2014.

December 2024 corn has not yet returned to its annual high of $5.02-1/4 per bushel set on Jan. 2 but came close on Tuesday, topping at $4.91-1/4.

Speculators

From late 2022 throughout 2023, money managers' views on CBOT corn futures and options tracked very similarly with the same period in 2012-2013. But 2024 totally diverged from 2014.

In late February 2024, funds forged a record corn net short of 341,000 contracts after eight weeks of heavy selling. However, funds were net buyers of corn for 13 consecutive weeks to start out 2014, going from a moderate net short of 95,000 contracts to a net long of 276,000 in that span.

Money managers had cut their net short to 218,000 contracts by the end of April 2024.

Supply Growth

The U.S. Department of Agriculture will issue its first official 2024-25 outlooks on Friday, though a tentative one was published in February. That showed 2024-25 U.S. corn ending stocks rising 17% on the year to a 37-year high, following a 60% increase in 2023-24 and a decline of 1% in 2022-23.

In February 2014, USDA pegged 2014-15 U.S. corn ending stocks up 43% on the year compared with an 80% increase in 2013-14 and a 17% decline in 2012-13, a year featuring catastrophic drought.

Analysts expect USDA on Friday will place 2024-25 U.S. corn ending stocks up 9% from 2023-24. In May 2014, USDA's first 2014-15 print was up 51% on the year, identical to trade estimates.

U.S. Exports

Compared with expectations, overseas demand for U.S. corn was on fire in early 2014. USDA between January and May 2014 boosted 2013-14 U.S. export estimates by 31% (450 million bushels), a practically unheard-of increase for that period.

USDA's 2023-24 U.S. corn export outlook has been unchanged since December at 2.1 billion bushels. In 2013-14, U.S. corn exports accounted for 37% of the world total versus an expected 27% this year, though Brazil increased its share to 26% from 16% during that decade.

South America

USDA in the first two months of 2014 reduced Argentina's 2013-14 corn crop by 8% on warm weather, and Argentine and Brazilian production combined was set to fall more than 10% from the prior season.

Slightly higher Argentine corn production was realized later in 2014, though USDA's 2013-14 Brazilian estimate went through four consecutive upgrades between April and July, gaining a total of 11% (8 million metric tons).

A decade later, Brazil's corn crop has expanded by more than 50% and Argentina's potential has nearly doubled. But dry weather has cut 2023-24 Brazilian crop estimates, and pest damage could cause large reductions in Argentina.

As of April, USDA pegged 2023-24 corn production among the two countries up a combined 3.5% on the year, though analysts see that margin falling to 1% on Friday.

Source: Reuters

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Add to Favorites

Warren Takunda

Economic

Stocks

Asian shares steadied on Thursday after solid Chinese trade data added to signs domestic demand in the world's second-largest economy is picking up, while the yen stabilised after three days of declines as Japan talked up potential currency interventions.

Later in the day, the Bank of England (BoE) will decide its interest rate policy, with all eyes on the prospects of a June rate cut following the overnight move by Sweden's Riksbank to cut rates, which underlined Europe's divergence from the U.S. Federal Reserve.

MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS), opens new tab rose 0.1%, hovering not far from a 15-month high hit earlier in the week after Fed Chair Jerome Powell reiterated a stance for policy easing later this year.

Investors will be focusing on the U.S. consumer inflation data for April due next Wednesday after three straight prints of upside surprises for a better sense of the direction of the Fed's policy.

Chinese customs data showed that imports jumped 8.4% in April from a year ago, beating expectations for a rise of 4.8%, while the gain in exports met forecasts.

That helped Chinese shares build on earlier gains, with bluechip stocks (.CSI300), opens new tab rising 1% and Hong Kong's Hang Seng index (.HSI), opens new tab increasing 1.2%.

Japan's Nikkei (.N225), opens new tab rose 0.5%. Nasdaq stock futures eased 0.1%, dragged lower by Uber (UBER.N), opens new tab, which fell 5.7% overnight as the ride-sharing company issued a downbeat forecast after a surprise quarterly loss.

"A first rate cut by the Riksbank has not been enough to further push the bullish sentiment. Eyes are on the Bank of England," said analysts at ING in a note to clients.

"Since Powell's dovish stance just last week, markets will listen carefully for a similar direction as the Fed. This also means that markets may face a surprise if a similar turn towards more dovishness is not reflected in this BoE meeting."

The Japanese yen steadied at 155.55 per dollar after falling for three sessions. It rose more than 3% last week after Japanese authorities likely intervened in the market twice to stem its fast declines.

On Thursday, the top currency diplomat Masato Kanda said there is no limit for reserves in currency intervention, keeping traders on edge, while minutes from the Bank of Japan's April meeting showed policymakers turned overwhelmingly hawkish, helping the yen steady.

However, Japan's real wages in March fell 2.5% from a year earlier, marking declines for two years, an argument for policymakers to not hike aggressively.

In the Treasuries market, yields were little changed after edging up the day before, with movements likely to be muted ahead of the U.S. inflation report next week. Two-year yields held at 4.8470%, while the 10-year yield was at 4.5003%, having risen 3 basis points overnight.

Oil prices were higher on Thursday, having bounced off two-month lows the previous session. Brent futures rose 0.4% to $83.91 a barrel, while U.S. crude gained 0.5% to $79.40 a barrel.

Gold prices were 0.1% higher at $2,311.23 per ounce

Source: Reuters

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Thomas

Stocks

The Saudi Tadawul Group and Hong Kong Exchanges & Clearing Ltd. are co-organizing a conference Thursday at a very opportune time given the city needs fresh stock listings and fund inflows to boost its status as a financial hub. While Hong Kong stands to benefit from the forum, it will also involve an army of Saudi company officials seeking more exposure to Asian investors.

“There is strong political will that is pushing for this relationship between China and Gulf countries,” said Edmond Christou, an analyst at Bloomberg Intelligence in Dubai, who recently met with investors and companies in Hong Kong, Shanghai and Beijing. “When you talk to businesses in China, you hear that clients are interested in investing in the Middle East. They are looking for ways to make that happen.”

Thursday's conference shines a spotlight on the latest strategy of Hong Kong's bourse operator to attract new investors to replace those from the US and Europe, who may be deterred from doing business in China at a time of rising geopolitical tensions. The nation's securities regulator also said last month it will encourage more firms to hold initial public offerings in the city.

Hong Kong Exchanges & Clearing has been having a tough time in recent years. The stuttering Chinese economy and increased saber-rattling between Beijing and Washington have sapped investor interest for China-linked shares. The amount of funds raised by IPOs in the financial hub slumped to $610 million in the first quarter, the lowest level since 2009, while the bourse operator's shares have plunged more than 50% from their highs of early 2021.

Hong Kong Exchanges & Clearing CEO Bonnie Chan is betting on the comeback of big ticket IPOs to the city. Speaking at Thursday's event, she said there are 100 applications in the pipeline and more expected to come.

“What we've seen lately, in the last two weeks of April, it's giving us a lot of hope,” she said.

Saudi Side

The appeal of closer ties with China are clear from the Saudi Arabian side too. Crown Prince Mohammed bin Salman is working to increase foreign ownership and pump liquidity in publicly-traded stocks under the kingdom's Vision 2030 agenda.

In contrast with Hong Kong, the Saudi stock market has been going from strength to strength. Market capitalization of the bourse has climbed 11% over the past three years, while Hong Kong's has dropped 25%. The main equities gauge in Riyadh has risen in seven of the last eight years, with a surge in inflows from foreign investors since 2019, when index compiler MSCI Inc. added the country to its emerging-markets equities benchmark.

Saudi Arabia's stock exchange is also enjoying a fresh burst of IPO activity in recent weeks and said more than 10 applications for listings have been approved. Upward of 50 companies have launched applications, Tadawul stock exchange CEO Mohammed Al-Rumaih said on Thursday at the conference.

Since November, investors in Hong Kong have been able to gain exposure to the Saudi market through the CSOP Saudi Arabia ETF, the first exchange-traded fund of its kind in Asia. The ETF debuted with more than $1 billion in assets and the backing of Saudi Arabia's sovereign wealth fund. Even so, it only attracted around $12 million in funds from its inception through April 24, according to calculations from Bloomberg Intelligence.

CSOP Asset Management Ltd. is working with asset managers to obtain regulatory approval for a cross-listing of the ETF in Shanghai, which should hopefully take place in the second half of this year, said Melody Xian He, deputy chief executive officer at the money manager in Hong Kong.

Chinese investors “are aware of the Middle East opportunities, but I think that, for most of them, it's hard to differentiate Saudi Arabia versus other markets,” she said.

Hong Kong announced on Thursday it's working with Saudi Arabia to launch an ETF in Riyadh that tracks Hong Kong's stock indexes. Formal negotiations have begun for an “investment promotion and protection agreement” between the two hubs, said Michael Wong, Hong Kong's deputy financial secretary.

“The friendship and partnership between Hong Kong and Saudi Arabia will go very far and will endure the test of time,” he said.

Hong Kong Chief Executive John Lee has long touted his ambitions to persuade the world's top oil producer Saudi Aramco to seek a dual-listing in the Asian financial center. While there's no sign of that happening in the near future, it would be a huge vote of confidence in the city's exchange if it takes place.

When asked about the potential for Saudi Arabian companies to cross list in Hong Kong, Saudi stock exchange CEO Al-Rumaih said “we want to have a path ready for them in case they decide to do so.”

Source: Bloomberg

Risk Warnings and Disclaimers

Add to Favorites

FastBull Featured

Remarks of Officials

Pierre Wunsch, Governor of the National Bank of Belgium, said on May 8th that the short-term inflation expectation is a key driver of the evolution of macroeconomic dynamics. Therefore, in the current economic environment, more attention should be paid to short-term inflation expectations and wage dynamics. The possibility of a wage-price spiral is another concern for inflation persistence.

Short-term inflation data are likely to oscillate substantially over the next few months. As wages are more inelastic than prices, wage growth is expected to remain stable this year, implying that real wages will return to pre-pandemic levels.

Inflation is expected to fall to the 2% target by the end of 2025. Thus, in the absence of signs that longer-term expectations will be de-anchored, the risks of maintaining restrictive monetary policy for too long outweigh the risks of cutting interest rates too soon. All in all, he still believes rates will be cut this year, despite the uncertain outlook. Monetary policy tightening is clearly synchronized globally, but it seems unlikely that the easing cycle will show similar synchronization.

Barring an unexpected shock to the economy, a rate cut in June is a wise choice, and the ECB is expected to cut rates by a total of 50 basis points over the next few months. However, after the rate cut in June, the ECB will be more cautious before the next rate cut. Future monetary policy should also be more flexible to accommodate modest deviations when economic conditions are favorable.

The ECB should rely on economic data to guide policy in the face of uncertainty and should not be committed to a fixed policy path in the current economic environment. Despite recent signs of a slowdown in inflation, there are still significant upside risks to wage growth and labor-intensive services inflation, and members will go deeper into the wages and services inflation at the June policy meeting.

Wunsch's Speech

Risk Warnings and Disclaimers

Add to Favorites

FOREX.com

Economic

Forex

Central Bank

Today's Bank of England (BOE) meeting will garner a lot of attention, to see if they signal the June cut markets so desperately want to hear. I'm not fully convinced they will. But that may not prevent the British pound from weakening as we approach the meeting in anticipation of such an announcement.

The big question for today is if the BOE will satisfy bearish market positioning with enough dovish talk to prevent shorts from covering, and inadvertently sending GBP/USD higher. Asset managers remained near the record level of net-short exposure to GBP futures, set two weeks ago according to the COT report. And large speculators were net-short for a second consecutive week, and at their most bearish level since January 2023.

Markets are pricing in 41bp of easing this year, which roughly equates to an 82% chance of two 25bp cuts by December. Yet ING have four cuts pencilled in, with easing to begin in August or potentially June.

GBP/USD Key Levels Into BOE, Silver Considers Its Next Breakout_1

Even if the BOE do not effectively confirm an incoming cut to arrive as soon as June or July, we may be able to indicate pressure is building to move if we see a change in MPC votes. Last month only one member of voted to cut, eight to hold and none to hike. Part of my finds it difficult to believe we'll see a material difference to chance policy today, given their last meeting was the first since late 2021 to not have votes for a hike. But if pressure is building to cut, it should at least see votes to cut be 2 or greater (which would mean hold would become 7 or less).

Ultimately, traders will want a clear script from the BOE to justify continued weakness of the British pound, as failure to do so could send GBP pairs higher.

Economic events (times in AEST)

11:00 – BOE interest rate decision, MPC votes, minutes

12:15 – ECB De Guindos speaks12:30 – US jobless claims

13:15 – BOE Bailey speaks

GBP/USD technical analysis:

The 1-hour chart shows a downtrend on GBP/USD, although it is within a period of consolidation after finding support at last week's low. Whatever happens, I suspect we'll at least see an initial move lower – with a clear dovish BOE likely required to send it beneath last week's low. Notice that the weekly S1 pivot sits between the April VPOC (volume point of control) and last week's ow, making it a likely support zone.

But if the BOE fail to deliver the dovish message traders seek, then GBP/USD could rally on the back of short covering. Note that the upper 1-day implied volatility band suits near the weekly pivot point and 200-day average, making it a likely area of resistance.

GBP/USD Key Levels Into BOE, Silver Considers Its Next Breakout_2

Silver technical analysis:

Regular readers will know that I have been awaiting for gold prices to pop higher over the past week. Whilst there's no cigar, the bias remains bullish until bearish momentum returns to the daily timeframe. However, silver may have the more compelling setup.

Silver prices formed a strong rally in March through the first half of April, before a 3-wave retracement found at the May high near the $26 handle. Momentum has pushed higher ahead of a small consolidation, with prices now holding above $27. Given this consolidation has formed around the VPOC from the 3-wave decline, it appears comfortable in its current consolidation. But if prices can break above last week's high ~27.50 then I suspect bulls will want to gun for the $28 handle at a minimum, or the high-volume node around $28.25.

GBP/USD Key Levels Into BOE, Silver Considers Its Next Breakout_3

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Kevin Du

Forex

Central Bank

Economic

The country's forex reserves decreased to $1.14 trillion in April, largely on the back of drop in the holdings of foreign securities to $978 billion from $995 billion the previous month, according to a finance ministry report Thursday. The securities holdings had been expected to fall due to a decline in the market value of overseas assets including Treasuries as yields rose.

The data come with evidence already pointing to two recent interventions in the currency market by Japan to prop up the yen. The first move came at the very end of April after the currency hit 160 against the dollar for the first time since 1990. The suspected intervention was likely not settled in the reserves data until the beginning of May.

“If there was intervention on April 29, the settlement day would be May 1, so it's possible the end of April foreign reserves don't reflect the intervention,” said Tsuyoshi Ueno, senior economist at NLI Research Institute.

A MOF official declined to comment about individual transactions made in April.

While Japanese officials have steered clear of confirming if they conducted intervention, a Bloomberg analysis of the central bank's current account suggests the nation probably entered the market twice last week, buying roughly ¥6.2 trillion ($40 billion) of yen in the first move and ¥3.2 trillion in the second, based on updated data and money broker estimates.

Japanese officials have been sticking to their strategy of concealing whether they have taken action, forcing investors to make educated guesses about the market moves. Finance Minister Shunichi Suzuki declined to confirm if the interventions took place when asked about the topic in parliament on Wednesday.

Japan's currency chief Masato Kanda said earlier Thursday that it wasn't true government officials spoke about market intervention, following a TV Tokyo report citing an unidentified official confirming that the government stepped into the market last week.

“We are not going to comment on whether the government intervened,” Kanda said. Japan is ready to take action at any time if it is needed, he added.

The data from the BOJ's current accounts has become more useful for estimating the size of intervention than analyzing the reserves, according to Masafumi Yamamoto, chief currency strategist at Mizuho Securities Co.

“Foreign exchange reserves have received less attention recently because they are affected by all kinds of factors, including fluctuations in non-dollar currency rates and changes in the market value of securities holdings.”

Source: Bloomberg

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

FastBull Featured

Remarks of Officials

Boston Fed President and CEO Susan M. Collins delivered a speech on May 8, with the main content as follows.

There is a lack of disinflationary progress made in 2024. In the short term, inflation in both core goods and core services (excluding housing) has picked up. However, I'm not surprised that there are some bumps in the road to disinflation. I remain optimistic that inflation can come back to 2 percent in a reasonable amount of time, with a labor market that remains healthy.

While some of the impact is still not yet reflected in prices, the core goods sector is unlikely to contribute more to disinflation. While new tenant rents have generally returned to pre-pandemic levels, existing tenant rents remain putting upward pressure on housing inflation. In addition, there is still a lot of uncertainty about the increase in labor supply and productivity.

Therefore, lower demand growth will be needed to make progress on inflation, particularly to promote a further slowdown in core non-housing services inflation.

Labor costs remain below pre-pandemic levels. Firms can afford to absorb faster wage growth without putting pressure on inflation. In addition, there is scope for wages to catch up to past prices and productivity increases over time without generating additional inflationary pressures.

Demand is expected to slow eventually to better align with the supply side, but the timing and magnitude of the slowdown remain uncertain.

Cutting interest rates too soon or holding too long is risky, which will lead to unnecessary economic damage. The current policy stance, which I view as being moderately restrictive, is appropriate for balancing the current two-sided risks. Also, I will focus on several areas particularly. First, short- and longer-term inflation expectations remain well anchored. Second, wages continue to evolve in a way that is consistent with price stability. Third, labor markets are moderating in an orderly way that better aligns labor supply and demand.

Collins' Speech

Risk Warnings and Disclaimers

Add to Favorites

Recent Searches

Top Searches

Markets

News

Analysis

User

24/7

Economic Calendar

Education

Data

Are 2024 Chicago Corn Futures Mimicking Those of 2014?

Prices

Speculators

Supply Growth

South America

Source: Reuters

Asian Shares Steady After Solid China Trade Data, Yen Stable

Source: Reuters

Hong Kong Woos Saudi Money in Attempt to Revive Stock Market

Saudi Side

Source: Bloomberg

[ECB] Wunsch: ECB Will Cut Rate by 50 Basis Points This Year

Wunsch's Speech

GBP/USD Key Levels Into BOE, Silver Considers Its Next Breakout

Economic events (times in AEST)

GBP/USD technical analysis:

Silver technical analysis:

Japan's Reserves Tally Likely Too Early to Reflect Intervention

Source: Bloomberg

[Fed] Collins: Lower Demand Growth Will Be Needed to Make Progress on Inflation

Collins' Speech

Risk Disclosure

Recent Searches

Top Searches

Markets

News

Analysis

User

24/7

Economic Calendar

Education

Data

Are 2024 Chicago Corn Futures Mimicking Those of 2014?

Prices

Speculators

Supply Growth

South America

Source: Reuters

Asian Shares Steady After Solid China Trade Data, Yen Stable

Source: Reuters

Hong Kong Woos Saudi Money in Attempt to Revive Stock Market

Saudi Side

Source: Bloomberg

[ECB] Wunsch: ECB Will Cut Rate by 50 Basis Points This Year

Wunsch's Speech﻿

GBP/USD Key Levels Into BOE, Silver Considers Its Next Breakout

Economic events (times in AEST)

GBP/USD technical analysis:

Silver technical analysis:

Japan's Reserves Tally Likely Too Early to Reflect Intervention

Source: Bloomberg

[Fed] Collins: Lower Demand Growth Will Be Needed to Make Progress on Inflation

Collins' Speech

Risk Disclosure

Wunsch's Speech