Price action: March corn futures lost 5 1/2 cents before settling at $4.46 1/4 but marked a 3/4 cent gain on the week.
5-day outlook: Corn futures plunged, led lower by sinking soybean futures. Despite rallying for five consecutive sessions late last week and into this week, corn futures quickly turned lower, giving up nearly all of this week’s gains today. Bulls are seeking to hold prices above the Jan. 18 low of $4.36 3/4 if weakness persists into next week, with little support aside from $4.42 1/4 on the way. March futures failed to overcome prior support, turned resistance stemming from the early January lows at $4.51 3/4 and recent corrective buying efforts have added fresh longs to the market, which could force a fresh contract low next week. Technical selling pressure is likely to persist over the coming week, though futures remaining near oversold levels could limit the downside.
30-day outlook: Brazilian safrinha corn planting will likely dictate the direction of corn over the coming month. Brazilian safrinha corn planting has begun well ahead of last year’s pace due to early maturing soybeans due to the early season drought. Many private analysts see acres falling well below year ago as both seed and fertilizer purchases are down. USDA current forecasts Brazilian corn production at 127 MMT, though many private analysts, including Dr. Michael Cordonnier, have a much more conservative estimate. Cordonnier currently estimates Brazilian corn production at 115 MMT and maintains a lower bias going forward. As Brazil continues to plant, a better estimate will be made on safrinha acres, which could give key insight to just how far the Brazilian corn estimate will fall from where the USDA currently sees it.
90-day outlook: The coming quarter will provide much needed clarity on South American production, but before too long attention will turn back to the domestic situation and the U.S. balance sheet. U.S. corn exports are now in the spotlight as both export sales and shipments should increase into early spring. As the corn balance sheet is expanding from record production and yield, the market needs to find a place for those extra bushels. The last two weeks of impressive sales are a good start, though more will need to be done to provide a significant shift in futures. March will bring the USDA Prospective Plantings Report. We expect acres to fall year-over-year due to relatively high soybean prices, though record anhydrous application in the fall due to the early harvest challenges that claim. If acres fall as we expect, it could provide a much-needed boost to both old and new-crop futures.
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